In today’s age, the best way for many businesses to move forward is to embrace digital transformation. Recent developments in technology have dramatically altered how small- and mid-sized companies operate, and while these changes have resulted in a myriad of benefits, they have also exposed businesses to unprecedented risks.
A recent survey by Chubb has found that while most small and mid-size enterprises (SMEs) showed eagerness to do business digitally, a lack of understanding of and preparedness for the potential risks have presented a huge challenge.
The insurance giant, in collaboration with Accenture, surveyed 1,350 SME professionals and executives from nine markets worldwide, including the UK, and identified four major trends that these businesses are pursuing to achieve digital transformation.
Digital-first communication: Around half of the respondents said they are improving digital channels to reach customers at the right time and place, with 45% focusing on seamless delivery of products and 46% prioritising products and services tailored to meet the needs of multiple generations.
Harnessing the power of data: Businesses are also placing high importance on the adoption of cloud technology, with three-fourths of those interviewed saying investing in artificial intelligence (AI) is their top priority in the next three years.
Supporting a transformed workforce: To address the “accelerated shift to an increasingly digital workplace,” SME leaders are implementing flexible work arrangements, prioritising talent acquisition and skills development, and offering innovative benefits.
Thriving in the global market: Companies are forming partnerships with large commercial players to create new products and services and utilising social media platforms to expand their reach and capability. Forty-one per cent (41%) of those surveyed believe doing so opens opportunities for global expansion.
“The findings are more relevant than ever in the current pandemic environment,” said Jonathan Poole, Chubb’s head of middle market in the UK and Ireland. “Small and mid-sized businesses were already catching up with their larger counterparts when it comes to digital transformation. COVID-19 only accelerated that transition.”
“As businesses’ digital capabilities grow, so too do their risk exposures,” he added. “Understanding the intersection between reward and risk is essential for businesses if they want to take advantage of the opportunities ahead.”
Chubb’s report identified several risks SMEs are facing as they pursue digital transformation. These include:
- Legal risks resulting from collection of large data sets.
- Liability from misuse or misinterpretation of client data for any consultation.
- Reputational risk and a need for incident response services due to cybersecurity breach.
- Liability exposures arising from failure of a product to perform.
- Machine errors arising from technology failures that result in property damage or bodily injury.
“Insurers, like Chubb, will be helping their SME customers navigate a new risk landscape, with the pandemic having put firms under immense pressure, accelerating the move to remote work and creating new cyber exposures,” said Max Richter, general insurance sector lead at Accenture UK. “As restrictions are lifted and UK SMEs ramp their operations back up, data and technology will play a key role in boosting efficiency, customer service and overall digital resilience.”