South West businesses say cost of living crisis is the top risk they face
Business leaders across the South West say that the cost of living crisis is the top risk to their organisation’s success, with the cost of materials due to the impact of Brexit, inflation and the rising costs of energy also a major concern.
The annual Gallagher Business Risk Index asked 1,000 leaders of UK businesses to identify the top risks affecting their firm.
The current cost of living crisis came first amongst businesses in the South West, identified as the biggest concern by a third (33 per cent).
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When asked why they had chosen the cost of living crisis as their top risk factor, the major driving factors were inflation (57 per cent), economic instability and uncertainty (52 per cent) and the increased costs of fuel and energy (35 per cent).
The second biggest risk facing businesses in the South West is the cost of materials (19 per cent), with businesses saying this is due to the cost of living (69 per cent), the rising cost of fuel and energy alongside inflation (54 per cent).
In 2022, the top risk facing businesses in the South West was employee retention (28 per cent) due to the impact of Brexit (cited by 50 per cent of business leaders), a smaller talent pool (35 per cent) and an increase in people switching roles following the pandemic (30 per cent).
In 2023 businesses in the South West still report problems with talent shortages with the lack of skilled talent featuring as the third top risk facing businesses in the region (15 per cent).
Businesses leaders said that inflation, a smaller talent pool and a shift in employee attitudes to work were leading to the shortage.
Post-pandemic, many businesses have faced the challenge of employees seeking alternative jobs due to their desire to work remotely and in a way that is more flexible.
Similarly, amid the cost of living crisis and inflationary environment, many individuals may be switching roles for a higher salary to counteract the impact of the crisis.
Cyber-crime featured higher on the list of top risks this year compared to last, with 11% of business leaders saying this was a concern.
Since last year, new risks have entered into focus with the top ten list now including fraud, cash-flow and outstanding debts and late payments owed to businesses.
The current inflationary background and economic climate is seeing more businesses struggling financially, this is reflected in recent Government figures that shows the number of registered insolvencies in May 2023 was 40 per cent higher compared to the same period in 2022.
Commenting on the findings, Steve Risk, regional managing director of the South West at Gallagher said: “Bosses in the South West are facing challenging and changeable risks to successful trading.
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"The cost of living crisis currently shows little slowdown and for many businesses this will have a knock on effect on sales as well as affect their employees personally.
“When it comes to concerns like debts, late payments and fraud, businesses can protect themselves against these kinds of financial risks by considering insurance which helps protect their business against the impact of these crystallising.
"There are many steps, including preventative risk management measures that businesses can take to become more resilient to the challenging economic environment and leaders should speak to their insurance broker to help them understand the options available to them.”
