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Competition is SMEs’ top risk

At a glance

  • Zurich has surveyed 3,000 SME executives and managers globally to discover the key risks and opportunities they face
  • The third annual Zurich global SME survey identified the impact of competition on margins as the top risk, while cost and expense reduction was the top opportunity
  • SMEs should focus on building resilience in order to manage these risks and opportunities

The impact of competition on margins remains the biggest concern of SMEs around the world, according to major global study by Zurich.

Zurich’s third annual global SME survey shows how perspectives on risks and opportunities among SMEs have changed since the study was first carried out in 2013.

This year’s survey gauged the opinions of 3,000 C-suite executives and managers at SMEs in 15 countries across Europe, the Middle East, the Americas and Asia-Pacific.

Competition is the top risk facing SMEs

Just over a third (34%) of respondents rated the impact of competition on margins as the greatest risk facing their business, in line with previous years.

Lack of consumer demand is the second greatest risk, and has increased in importance, up to 32% from 24% in 2013. Legal and fiscal problems were third on the list, up from 11% to 14%, while reputational damage was fourth, having risen from 8% in 2013 to 13% in 2015.

Although only ranking 12th globally, cybercrime is growing in importance, with 8% of SMEs citing it as their greatest risk, compared to just 4% in 2013.

Other risks ranking lower down the list of 14 potential business risks include corruption (6%) and riots (4%).

SMEs should focus on building resilience

It is telling that SMEs globally are increasingly focused on business issues they have the power to influence, while paying less attention to external factors.”
Kristof Terryn, CEO of Zurich’s General Insurance business

Kristof Terryn, CEO of Zurich’s General Insurance business, said: “It is telling that SMEs globally are increasingly focused on business issues like competition, margin pressure, weak demand, reputation and financial issues that they have the power to influence, while paying less attention to external factors.

“We believe this is a very rational response to what is an increasingly interconnected and globalised business environment. Companies should focus on building resilience, managing the risks that they can control and outsourcing the rest through insurance or other solution providers.”

Economic recovery building SME confidence

The survey also looked at what SMEs see as their greatest business opportunities. It is clear the global economic recovery and growth is making SMEs more optimistic. They identified cost and expense reduction (31%) and new customer segments (29%) as the top two opportunities in 2015.

Attractive credit terms (17%) moved from ninth to fourth on the list of potential business opportunities. The survey also revealed that the majority of SMEs plan to grow organically, while acquiring competitors was seen as the least attractive opportunity to grow (9%).

The global survey revealed significant regional differences. European SMEs tend to see more opportunity in attractive credit terms than SMEs in most other regions (21% in 2015, compared to 13% in 2013), which could be due to growing business confidence in the Eurozone as the region stabilises.

To find out some of the key risks facing SMEs in the UK, see Zurich’s latest SME Risk Index or speak with your local Zurich contact.

Image © Getty

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