Business threats you should be aware of

With advancements in technology, shifting consumer preferences, and evolving market dynamics, businesses must stay ahead of the curve to thrive in this rapidly changing landscape. Here we will explore the top business threats anticipated to shape the business environment in 2023, providing insights and strategies for organisations to successfully navigate these challenges.

From emerging technologies to growing cyber risks, let's delve into the key business threats you should be prepared for.

1. Addressing macroeconomic developments

In 2023, businesses face a fresh set of challenges with macroeconomic developments taking centre stage. Global crises in the US, China and Europe, along with the Russian invasion of Ukraine, are hitting us where it hurts – energy prices are skyrocketing, and inflation rates are at an all-time high.

To make matters worse, the UK is stuck in a recession, and the economy is expected to contract by a not-so-encouraging 0.7% this year. But there's a glimmer of hope. Inflation and energy prices are predicted to stabilise in the second half of the year, leading to an increase in economic activity.

2. Improving cybersecurity defences

Businesses of all sizes have become increasingly dependent on technology. From storing stock to customer data or vital business information, everything is stored digitally, making it vulnerable to hackers and criminals. Due to the COVID-19 pandemic, businesses largely invested in new technology and communication platforms, increasing phishing and ransomware attacks and creating more opportunities for cybercriminals.

Shockingly, between 2022 and 2023, 32% of UK businesses reported experiencing an attack or breach, with higher rates for medium-sized businesses at 59% and large businesses at 69%. The financial impact was significant, with the average cost of a breach for medium and large businesses reaching £4960. Businesses must prioritise cyber insurance and measures to protect their sensitive information and mitigate the risk of costly breaches.

3. Prioritising mental health

One of the prominent business threats in 2023 is the issue of mental health in the workplace. As awareness around mental health continues to grow, organisations are recognising the importance of prioritising employee well-being. The COVID-19 pandemic has further emphasised the need to address mental health challenges as remote work, isolation, and increased stress have taken a toll on employees.

Businesses must create a supportive and inclusive work environment that promotes open conversations about mental health. Implementing initiatives such as mental health resources, flexible work arrangements, and promoting work-life balance can help mitigate the negative impacts on employee well-being and productivity.

4. Strengthening supply chains

The UK supply chain has been in crisis since 2021, and the struggles continue into 2023. Small and medium-sized businesses have suffered estimated losses of £3.9 billion, highlighting the severity of the situation.

Material shortages, high freight prices, port congestion, and inflation are among the main reasons for these ongoing supply chain challenges. Manufacturers and suppliers worldwide have faced uncertainties, stock shortages, and delays in fulfilling orders. Unfortunately, these issues are expected to persist throughout the year due to increased consumer spending and the need to catch up on previous orders.

5. Adapting to evolving market trends

It's absolutely crucial for businesses to stay informed about emerging risks so they can protect themselves. With technology moving at lightning speed and regulations constantly evolving, new business threats can arise that may not be adequately covered by existing business insurance policies.

Businesses must proactively monitor industry trends and developments that could impact their operations and assess their insurance needs accordingly. Consulting with insurance providers who specialise in these emerging risks can help identify coverage gaps and ensure business protection. By staying proactive in assessing and addressing evolving business threats, they can mitigate potential losses and ensure long-term resilience.

6. Overcoming skill shortages

A shortage of skilled workers has been listed as one of the top 12 risks identified by AGCS.4 The retirement of highly skilled, older workers has raised concerns for companies, highlighting ongoing hiring challenges as a business threat in 2023.

To address this business threat effectively, a multi-faceted approach is necessary. Investing in employee development and training programmes is crucial to bridging the skills gap and nurturing talent. By providing growth opportunities and enhancing workforce capabilities, organisations can tackle the shortage of skilled talent.

Additionally, creating an attractive workplace culture and a strong employer brand are essential for attracting and retaining top talent. Offering competitive compensation packages, flexible work arrangements, and advancement prospects allows businesses to stand out in a fiercely competitive market.