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New research reveals the top three risks UK businesses face over the next 12 months

Risk

New research from Marsh, the world’s leading insurance broker and risk advisor, has revealed that the impact of financial uncertainty (34 percent), employee health and wellbeing (31 percent), and supply chain disruption (23 percent) are the biggest concerns facing UK businesses over the next 12 months.

Now in its third year, Marsh’s UK Business Risk Report 2023 discovered that financial uncertainty is the top risk facing UK businesses due to rising inflation, energy prices and raw material costs.

However, despite its place at the top of the list, financial uncertainty saw the lowest percentage recorded over the last three years (43 percent in 2021 and 37 percent in 2022).

Marsh notes that this is due to businesses strengthening their financial resilience during the pandemic and a return to more familiar financial risks in a post-Covid landscape.

Despite operating in a challenging trading environment, many UK businesses state that they are feeling optimistic about their financial prospects for the year ahead, with 50 percent saying they are expecting an increase in productivity, 47 percent expecting an increase in turnover and 46 percent expecting an increase in profitability.

Other findings reveal:

  • Risks involving people rank high on the list of concerns, including employee mental health and wellbeing in second place (31 percent), talent retention, attraction and succession planning in fourth place (22 percent), and health and safety of the public and employees taking fifth place (21 percent)
  • Over the last 12 months, only 47 percent of UK businesses addressed health and safety policies and procedures & employee mental health and wellbeing offerings (51 percent). However, looking to the future, these are determined to be the top two ‘people’ priorities. One in three businesses also report that reviewing workplace culture and leadership is a focus area for the year ahead
  • The majority of UK businesses say environmental, social and governance (ESG) standards are a priority, with just over half (55 percent) of all respondents understanding ESG requirements and half (50 percent) incorporating ESG into their business strategy. Additionally, 48 percent of businesses report that they have reviewed their suppliers’ ESG strategies over the last three years
  • Even though reporting on ESG performance is mandatory for large UK businesses, the vast majority of respondents (76 percent) have not yet embedded ESG into their business strategies

Commenting on the findings, Alistair Fraser, CEO, Commercial & Corporate, Marsh UK, said: “The UK risk environment over the last year has been heavily impacted by macroeconomic changes, as well as the trickle-down effects of geopolitical events. From sole traders and fast-growing companies to large established corporates, no commercial entity in the UK is exempt from requiring a robust approach to risk management. This report tells a story of the very broad spectrum of risks facing UK businesses and provides practical advice on how to tackle them, helping strengthen the resilience that they need to grow with confidence.”

The report features data obtained throughout May and June 2023 from over 2,100 UK businesses with a turnover of between £100,000 and £500 million+ per year.

It explores how circumstances over the last 12 months have impacted the business risk appetite and approach to risk management among UK companies, and identifies their priorities for the year ahead.