These are the top threats small businesses face

Small business in South Africa face various primary challenges, but there are proactive measures and strategies that can help them to mitigate the issues they have to handle.

“The continued threats of load shedding and crime, coupled with the effects of the rising diesel price and interest rate hikes, as well as severe weather events due to global warming, have immense knock-on effects for small businesses,” says Hermanus van der Linde, CEO of IntegriSure Brokers.

Crime biggest risk to small businesses

He says the release of the latest SAPS quarterly crime statistics unequivocally illustrates that crime continues to pose the biggest risk to small businesses, with commercial crime surging by 10.1%, business burglary by 12.2% and shoplifting by a staggering 20.3%.

Each criminal incident, whether it involves stolen merchandise or cash, Van der Linde says, directly affects the bottom line of small business owners as crime not only exacts a direct cost through loss of assets and funds but also imposes indirect expenses, such as increased security measures, burglary-related repairs, temporary business closures and lost working hours.

Weigh up your options

“Life can be unpredictable and even more so in the world of business, where even the smallest disruption can significantly affect your livelihood.

“Ensure that you are adequately insured by talking to your broker for a product option specifically designed to provide peace of mind against the unique risks that your business faces so that you can focus on what you do best: Getting on with business.”

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Ensure your insurance is 100%

Van der Linde says it is very important that the descriptions and replacement values of all your assets, as well as the descriptions of all security measures, such as tracking devices or vehicle and building alarms, must be noted down 100% correctly on your schedule as all claims settlements will be based on the information noted in your policy schedule.”

Therefore, he urges businesses to immediately declare any changes to their risk that may affect their cover and insured values.

“If you are uncertain about the impact of a change, contact your broker for advice. In the current economic climate small businesses simply cannot take the risk of any interruption to production or services rendered.”

Cybercrime threat

Cybercrimes are another formidable threat confronting businesses and has increased alarmingly. According to Interpol’s 2022 Africa Cyberthreat Assessment Report, South Africa leads the continent with the number of cybersecurity threats, with 230 million threat detections identified in 2022.

South Africa had a 100% increase in mobile banking application fraud and is estimated to suffer 577 malware attacks each hour. The average cost of a data breach in the South African business landscape is R40 million, excluding reputational damage.

Van der Linde says despite these concerning statistics, many small businesses believe they are not viable targets for cybercriminals and that they will not be affected and consequently decide against getting cyber insurance.

“No business is immune. Among our commercial clients we have noted a rise particularly in the interception of company documents containing bank details which leads to enormous financial losses when unsuspecting customers pay funds into the bank accounts of cyber criminals instead of the intended company.”

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Do not forget cyber attacks

He warns that any business with a computer network, regardless of size or sector, is potentially at risk of being a victim of a cyber-attack and should therefore prioritise their approach to cyber risk management.

There are various cyber insurance cover options in the market ranging from security and privacy liability, data recovery and loss of income, to business interruption and loss of business income.

“The concerning surge in cybersecurity crimes serves as a clear indication of a shifting risk landscape and highlights the importance of educating businesses about the purpose and significance of integrating cyber cover into their insurance portfolios.”

Van der Linde says in the ever-evolving realm of risk management, businesses encounter a multitude of complexities that demand expert guidance on aspects from the intricate interplay of adverse weather, the ongoing energy crisis, opportunistic crime and crime syndicates, to the ever-advancing techniques of cybercrime, the need for a knowledgeable broker has never been more critical.

“A skilled broker not only provides the best advice on risk management for small businesses but also becomes an integral part of the organisation, forging strong relationships that underpin long-term success.”