Supply chain disruption, the energy crisis and economic pressures: Aviva Risk Insights Report 2023
Our latest Risk Insights Report is here.
After capturing the views of 1,251 business leaders from small to large corporates and across nine industry sectors, the report highlights the top ten risks facing UK businesses in today’s market. This data identifies emerging trends alongside expert opinions, helping you to prepare for these risks and to navigate the challenges that many businesses will be faced with in the months ahead.
What are the key takeaways from the report?
- Net business confidence levels in the UK economy plummets to -50%, from +5% 12 months ago
- Business leaders more worried about current economic outlook (77%) than they were about the impact of Covid during the crisis in 2020 (58%)
- 45% of companies report a supply-chain impact on their business; 38% are experiencing significantly higher supply chain costs
- If energy costs increase by 5 to 10 times 2020 rates, 58% of businesses believe they'd be unlikely to survive beyond a year without additional support
Economic concerns: The ongoing cost of living crisis is weighing on businesses’ confidence. 39% of business leaders said they're ‘worried’ about the impact of the cost of living on their business and 75% said the crisis will have a ‘serious’ impact on their business. Six of the top ten risks business leaders are concerned about are related to the economy.
Energy crisis: Should energy costs increase by 5 to 10 times 2020 rates as some analysts have suggested, 58% of businesses believe they'd be unlikely to survive beyond a year without additional support. Almost a fifth (19%) of small businesses report that they'd be likely to close immediately.
Supply chain: Forty-five per cent of companies report a supply chain impact on their business; 38% are experiencing significantly higher supply costs as a result of systemic inflation pressures and 59% of businesses anticipate further increases in supply chain costs over the coming year.
Shortage of a skilled workforce: Nearly two-thirds (63%) of companies have struggled to attract new employees and 64% have struggled to keep existing staff. Over a quarter of companies are increasing pay to attract or retain staff (31% to attract and 25% to retain), further impacting an already-squeezed bottom line.
Underinsurance: Amid widespread economic pressures and concerns, a fifth of UK businesses (21%) have reduced, or considered reducing, their insurance cover over the last year. However, Aviva’s own estimates based on an analysis of its customer portfolio is that 50% of UK businesses are underinsured to some degree and that 40% of policies with buildings have at least one premises suspected to be underinsured by 20%.
Commenting on Aviva’s Risk Insights, Adam Winslow, CEO of Aviva UK & Ireland General Insurance, said:
“Over the course of 2022, cost pressures for businesses have evolved into a full-blown cost of living crisis across the UK economy, driven by systemic inflation and soaring energy prices, which have been impacted by the war in Ukraine combined with enduring post-Brexit and post-Covid-19 pressures. The crisis is impacting individuals, communities and the companies they work for in different ways, from increasing supply costs for companies and reducing consumption by customers to creating financial stress at large. Collins Dictionary’s word of the year for 2022 was ‘permacrisis’ – an extended period of instability and insecurity, resulting from a series of catastrophic events – which perhaps encapsulates the current operating environment for UK businesses.”
In a recent Insure TV interview, Chris Andrews, (Director of Aviva Risk Management Solutions) discusses what these latest insights mean and how businesses can respond.
To find out more, read the Aviva Risk Insights Report.
You can join the conversation on LinkedIn with #AvivaRiskInsightsReport2023.
This report and article contains general information, guidance and opinion only and may be superseded and/or subject to change without further notice. Aviva has no liability to any third parties arising out of this content whatsoever and nor shall any third party rely on it. Other than liability which cannot be excluded by law, Aviva shall not be liable to any person for any indirect, special, consequential or other losses or damages of whatsoever kind arising out of access to, or use of, or reliance on anything contained in report or article. The content of the report and article may not cover every risk or exposure that may arise and Aviva recommend that you obtain specific advice relevant to your business.