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Businesses now spending more time on business strategy and risk management
Businesses are strategising more in today's professional scene

The past five years of economic stagnation and volatility have forced UK businesses to significantly adapt their attitude and approach to risk, research finds. 

Small and medium-sized enterprises (SMEs) have undertaken the biggest risk-management behaviour shift in a generation, with 53 per cent spending more time on their business strategy and risk management than they did before the financial crisis, according to a study by Zurich.

Some 35 per cent are doing more long-term financial planning, and 33 per cent are scrutinising their business continuity plans more frequently.

However, by doing so, SMEs have adopted a notable conservatism that raises elements of uncertainty about the long-term strength and growth prospects of the UK’s SME economy. 

The past five years have put a squeeze on SMEs and many do not have ample cash or resources, nor enough awareness of the full longer-term costs they will face, in order to tackle on-going stagnation or volatility.

Zurich director of SME Richard Coleman says that while it is good to see the increased sophistication and long-term view of many SMEs, the SME economy needs to regain its appetite for controlled, calculated risk-taking, with many reluctant to do so.

'This vicious circle is likely to play out until either the context for risk-taking decreases for UK SMEs, or the wider economy starts to show signs of rebounding. 

'SMEs are essential to the UK business and economic environment, so ensuring that a balance exists between risk-taking and risk prevention represents a significant economic and policy challenge today.'

The research also finds that confidence and performance have defined a twin track of 'winners and losers' in the UK’s SME economy. 

The 59 per cent of respondents who are confident about their business outlook have demonstrated a dramatically higher level of performance than the less confident respondents.

For example, the most confident of those surveyed have achieved admirable growth in turnover in the past two years. Two in five (39 per cent) report growth and only 13 per cent report shrinking turnover, but almost a half (47 per cent) of the less confident report shrinking turnover and just 9 per cent achieved some growth, the polar opposite trend.

See also: Effective risk management

Related topics: Entrepreneurs

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