If you knew, or at least thought you knew, that a major problem for your business was on the horizon, would you not take steps to prepare for its eventual arrival? Well according to a large percentage of UK SMEs, the answer is no.

This is according to new research commissioned by insurance brokers Arthur J. Gallagher and conducted by YouGov. The survey of over 1000 business leaders revealed that while 44% of UK employers expect to be facing some form of attack upon their security in the near future (cyber security of course being a primary concern in the digital age), a staggering 43% still have no contingency plan in place should such an attack occur.

Further adding to the issue is the fact that just 30% of respondents have appropriate insurance in place to respond to a crisis of this nature, with an additional 40% being unaware whether they are covered by insurance or not.

The study also showed a clear difference between perception and reality, as while 68% of employers believe that they are well equipped to deal with a security crisis, their planning and insurance record, as indicated above, shows otherwise.

The need for better preparation is also clearly outlined. 19% UK SMEs have faced an external security threat within the past two years, and 44% believe they will face on in the next 12-18 months. Specifically, 27% expect to become a target of cyber extortion in the coming years.

The reason for this widespread lack of preparation appears to be the belief among many SME owners that their businesses are simply too small to be targeted, but as many of these attempts at compromising corporate security take something of a non-targeted, blanket-bombing approach, this assertion is fundamentally incorrect.

Paul Bassett, Managing Director of Gallagher’s Crisis Management practice, said of the research and its results, “It is vital for SMEs to build a culture of crisis resilience. Their growing awareness of an overall increase in security threats needs to be matched by actions that will help them mitigate and manage their own vulnerability to those risks. Our research shows education is key; clearly, there is a disconnect between the current level of planning by SMEs and how resilient they believe themselves to be, creating a false sense of security.

“Many evidently feel they are too small to be targeted but today’s fast-evolving security threats are often not targeted at any particular company or industry. Exposure to the risk of non-damage business interruption – where no physical loss has been suffered but you aren’t able to trade – is a particular area of concern. That could be experienced because of proximity to a terrorist incident or an indiscriminate cyber extortion attack, for example.”

Justin Priestley, Executive Director of Crisis Management at Gallagher, further commented, “It’s impossible to insure against every eventuality, but brokers have an opportunity to demonstrate their value by taking a consultative approach and working with SMEs on a more in-depth risk assessment and analysis. This will allow clients to make informed decisions about the steps they can and should take to become more crisis resilient.

“The provision of new solutions, that respond to a wide-range of security threats but at a cost-effective price point, will also help to ensure smaller businesses, in particular, are in a better position to anticipate, prevent, respond, and recover if hit by the unexpected. After all, a £50,000 cyber extortion demand or week of business closure is much more likely to threaten the survival of an SME than a large firm.”

The report, titled ‘Understanding security risks: how SMEs can build a culture of resilience’, is available for download here.

Sam Bonson

Sam is an aspiring novelist with a passion for fantasy and crime thrillers. He is currently working as a content writer, journalist & editor as he continues to expand his horizons.
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