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|Five Risk Trends Affecting Smmes by iamprincewill: 9:06pm On Mar 19, 2021|
The world certainly looks very different a year later, and nowhere is it more apparent than in the Small, Medium, and Micro Enterprises (SMME) space.
The sector has faced more than its fair share of obstacles during the Covid-19 pandemic amidst a contracting economy and lockdown measures that reduced income streams to a trickle.
The SMME sector is critical to South Africa’s economic growth, employing around 80% of the African continent’s workforce. It is also the sector that has been hardest hit by the pandemic and the subsequent lockdowns, making it crucial for SMMEs to identify the trends impacting their businesses and finding ways to leverage new opportunities.
Aon South Africa, risk advisors, and insurance brokers delve into the top five trends affecting the SMME sector:
1. Changing consumer buyer behavior
The key factor in demographics is not just how the world’s population will grow, but how consumer buyer behavior is changing amidst an upended world. Failure to innovate and meet customer needs was one of the top ten risks, rated at number nine in Aon’s 2019 Global Risk Management survey. The pandemic shifted the importance of this risk into top gear. Many companies had to scramble to reimagine their product delivery and consumer purchasing journey in a pronounced shift into a digital world that is likely to remain long after COVID-19 has abated. In fact, 86% of respondents in a PWC Global Consumer Insights Survey 2020, said they are likely to continue to shop online when social distancing measures are removed.
According to Clayton Ellary, from Aon South Africa’s Commercial Risk Solutions Division, innovation is a necessity, not an option. “It also means that disruptive technologies, such as artificial intelligence, blockchain, or the Internet of Things may be the key to transforming the current playing field. Start-up companies tend to be more agile in their efforts to meet the changing needs of consumers. The fine line between success and failure is defined by an organization’s ability to reinvent itself in an ever-changing market where disruption is fast becoming the norm.”
2. Technological reliance
As companies become more reliant on technology, technological developments and increases in data and analytical power create unlimited business opportunities; But also bring risks around cybersecurity and data privacy.
Cyberattacks on South African organizations show no signs of abating.
“Whether a large or small business, a cyber breach has the potential to inflict enormous reputational damage, cause major interruption to normal business operations and income potential, and can also have legal ramifications if personal and financial information is compromised in the context of the Consumer Protection Act (CPA), the Electronic Communications and Transactions Act (ECT) and the Protection of Personal Information Act (POPI),” says Ellary.
“South Africa will continue to see large-scale ransomware attacks that target administration credentials to gain access to and infect, wider networks – often targeting SMMEs and contractors to gain access to larger client corporations. With the expected increase in ransomware attacks designed to spread through a network, organizations of all sizes and industry sectors need to take steps to protect their networks and ensure that their risk management and insurance programs are fit for purpose to protect them in a worst-case scenario,” urges Ellary.
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