25 February, 2015 – In a recent study on behalf of Zurich Insurance, 3,800 senior executives of small and medium sized enterprises (SMEs) around the world were asked to list the top three risks faced by their businesses.
South African business owners identified high competition/dumping prices impacting sales margins; lack of consumer demand/overstocking; and customer or employee health and safety as their main concerns. This was followed by reputational damage, corruption and legal and fiscal problems. Interestingly, cybercrime and natural disasters featured low on the list of perceived risks.
|Ranking: SA SME Risks|
|High competition/dumping prices impacting sales margins and lack of consumer demand/overstocking|
|Customer or employee health and safety|
|Legal and fiscal problems|
|Transport/damage to company vehicle|
|Technological vulnerabilities/IT failures and fire|
|Failure of partners and suppliers|
|Cybercrime and riots or malicious damage|
|Natural catastrophes/unpredictable weather|
From a global perspective, companies shared the same sentiments as SA SMEs, but ranked theft third overall. Findings showed that smaller companies around the world are mostly focused on risks that are likely to affect their bottom line rather than tail risks like supply chain or natural catastrophes that could destroy their businesses.
“There is no doubt SMEs have been hit hard by the financial crisis”, comments William Surmon, National Head of Sales and Distribution at Zurich SA. “Despite this, entrepreneurs globally and locally have demonstrated resilience and tenacity; aiming to thrive in what is still a competitive and challenging environment. Governments across the African continent, including South African leaders, have recognised that SMEs are a strong driving force for socio-economic development and have prioritised the expansion of small businesses within their respective markets. Insurance plays an important role in facilitating this growth; helping SMEs fulfil their ambitions by giving them the tools to manage the risks they face and thereby, the tools to pursue growth opportunities.”