Bad weather - big threat

New findings from AXA’s Business Risk Monitor survey have revealed that UK SME directors belive that environmental disasters such as flooding and hurricanes are a more common reason for business failure than poor management or competition.

When asked what they thought was the most common reason for business failure, just three per cent accredited bad or poor management and only one per cent believed that it was down to competition. A much bigger proportion (12 per cent) considered a potential environmental disaster as a bigger threat to their businesses.

The top seven reasons cited were:
• Unstable economy
• Lack of good staff
• Lack of business continuity planning
• Technology failure
• Unreliable suppliers
• Non-compliance with legislation
• Environmental disasters

Says Douglas Barnett, Risk Control Manager at AXA: “Whilst the key factors are at the top of the list as you would expect, we were very surprised to see that more business owners thought that businesses were more likely to fail due to an environmental disaster, rather than as a result of poor management and the threat of competition.

“Both of these factors are regularly mentioned by organisations that handle insolvencies and in the media as reasons why businesses fail in the UK.

“In 2005 there were 330,000 business failures in the UK - a rise of four per cent from the previous year. Whilst I appreciate that we cannot afford to ignore the effects of global warming and changes in weather patterns, I would think poor management and marketing are a much more sinister and immediate threat to the success of UK plc.”