At a glance
- Information technology is now a vital tool for businesses of all sizes
- SMEs say that computer equipment is now their most important asset, and cyber risk their greatest operational threat
- Brokers can gain a competitive advantage by getting to grips with cyber risk and offering customers the solutions they are increasingly demanding
Information technology (IT) has revolutionised the way today’s businesses operate – from the advent of email and mobile communications, to the continued growth of online trading and electronic payments.
As a result, IT infrastructure has become a crucial asset for most small and medium-sized enterprises (SMEs), as well as a key source of growth.
While IT continues to offer exciting opportunities, SMEs are becoming increasingly aware of the risks that accompany their growing reliance on computer equipment.
SMEs’ most valuable asset
In our latest SME Risk Index, nine out of ten (89%) SMEs said computer equipment is an important asset to their business – more important than assets such as stock, buildings, other types of machinery, and even their business’s brand name.
This reliance on IT is only expected to increase in the coming years, with SME decision makers highlighting several information technologies as offering the best growth potential for their business.
One in five say that online trading and social media marketing is their biggest opportunity for growth, with innovations such as mobile technology (18%) and cloud computing (11%) also ranking highly.
“As consumers fully immerse themselves in the digital age, businesses must change to meet the changing needs of the market,” says Anne Griffiths, Head of SME Propositions at Zurich.
“When we speak to business owners we are seeing that change, as small companies across the UK are going digital to stay competitive, to keep profitable and to meet the evolving needs of their customers.”
Emerging operational risks
The UK Government estimates that roughly 60% of small businesses have suffered a cyber breach at some point, incurring average costs of £65k to £115k.
As we become more knowledgeable about the prevalence of cyber crime, and major breaches gain global media attention, businesses are under mounting pressure to address their own IT and cyber vulnerabilities.
Encouragingly, however, SMEs do appear to be taking note, with a third (34%) now citing IT management as their biggest operational risk, and a quarter most worried about cyber and data security.
When considering major incidents, more than a quarter (28%) of SMEs think a cyber attack or loss of data would have the greatest impact on their business’s income – ranking higher than all other concerns, including supplier failure, machinery breakdown and negative media coverage.
“As technology becomes more prevalent, so do the risks to sensitive data and information,” says Anne. “It is encouraging to see the number of small businesses identifying cyber security as a major risk.”
Helping SMEs meet emerging risks
Despite an increasing demand from customers for IT risk solutions, cyber insurance remains the least traded commercial insurance product in the UK.
Complexity of the subject matter and a lack of understanding are cited as key reasons for this, presenting a major opportunity for brokers to gain a competitive advantage by becoming experts in this field.
For more information on the various cyber risks your SME customers face, please visit the links listed in the ‘Further Reading’ section, explore Insider’s various articles on the topic, or speak with your local Zurich contact.