2023 looks to be one of the most challenging years for businesses across the UK. With major changes in the economy still being felt in the aftermath of the pandemic, and the rise of technologies such as artificial intelligence, businesses will have to adjust their strategies for success.
The Top 5 Risks That UK Businesses Are Expected To Face in 2023
1. Cyber incidents
Cyber incidents, including IT outages, ransomware attacks, and data breaches, continue to be the top risk for UK businesses. The ongoing conflict in Ukraine and wider geopolitical tensions are increasing the likelihood of large-scale cyber-attacks. Data breaches are a major concern for companies due to the potential for significant notification costs, fines, penalties, and reputational damage. Ransomware attacks remain a top worry as well, with the UK experiencing the third highest rate of such attacks in the world.
Small businesses are particularly vulnerable to cyber incidents as they often have weaker security controls and fewer resources to deal with the aftermath of an attack.
2. Business interruption
Business interruption, including supply chain disruption, is another significant risk for UK companies. Despite efforts to diversify business models and supply chains post-pandemic, disruptions persist. The recent turmoil in Ukraine and ongoing global supply chain issues, such as semiconductor shortages, are causing further strain on businesses.
3. Macro-economic developments
Macro-economic developments, including inflation, deflation, and monetary policies, have emerged as a new risk in 2023. The simultaneous crises in the US, China, and Europe, along with the Russian invasion of Ukraine, have led to increasing energy prices and inflation. The UK is currently in a recession, with the economy expected to contract 0.7% in 2023. However, some experts predict a return to growth during the second half of the year as inflation and energy prices begin to stabilize.
4. Energy crisis
The energy crisis, another new entry for 2023, has also impacted businesses. Energy prices have risen due to post-pandemic economic recovery, supply chain disruptions, and delayed maintenance work. The crisis intensified with the invasion of Ukraine by Russia, the world's largest exporter of fossil fuels. Although the UK relies on Russia for less than 4% of its total gas supply, it remains susceptible to fluctuating international gas prices.
5. Shortage of skilled workforce
The shortage of skilled workforce, a consequence of the Covid-19 pandemic and rising wage inflation, persists as a risk for UK businesses. Many countries, including the UK, face a reduced workforce and high demand for labor. The situation is exacerbated by post-Brexit immigration rules. The construction industry is among the hardest hit, with 75% of contractors experiencing recruitment issues.
Protect Your Business With Public Liability Insurance
Tradesman Saver is committed to helping businesses navigate these risks by providing tailored insurance solutions to protect against potential losses. To learn more about how Tradesman Saver’s public liability insurance can support your business, visit our website https://www.tradesmansaver.co.uk/public-liability-insurance/ or call our helpline for more information.