CHRIS TANKE
Transportation Practice Leader & Associate Vice President

Lloyd’s of London recently published its 2013 Risk Index. The Risk Index [click here to access the 48-page PDF] is done every two years and is a compilation of survey data from companies with less than $499 million in sales.

Measurements include top risks on companies' radar and how prepared they feel to deal with risk. The majority of the survey takers (55%) were CEOs, presidents, and managing directors — in other words, leaders who set a company's course through a sea of business risks.

Let’s look at the top 13 small business risks for 2013:

1.) High Taxation

2.) Loss of Customers/Canceled Orders

3.) Cyber Risk

4.) Price of Material Inputs

5.) Excessively Strict Regulation [tie with Changing Legislation]

5.) Changing Legislation

7.) Inflation

8.) Cost and Availability of Credit

9.) Rapid Technology Change

10.) Currency Fluctuation

11.) Interest Rate Change [tie with Talent & Skills Shortage]

11.) Talent & Skills Shortage

13.) Reputational Risk

Lloyd's report dug into the top five risks — high taxation, loss of customers, cyber risk, price of materials, and strict and changing regulations — to provide greater context for what's going on in the world. The risks of high taxation and changing regulations are tied to ethics and businesses' avoidance of uncertainty. For instance, many businesses have suffered brand damage because of perceptions of corporate tax avoidance. The risk of loss of customers reflects a global trend toward austerity. Cyber risk shows that the rest of the world is catching up in terms of technology, and the risk of the price of materials reflects scarcity and concentrated control of inputs to a particular region (oil is the classic example of this risk).

Lloyd's found that with nine of the 13 risks, businesses feel less prepared to deal with risk than in 2011. What's more, to deal with the top 13 risks, insurance only can be a part of the solution.

What does this mean for your business? How can you gain greater understanding of the risk you face in your unique markets? Here are some questions to get you risk manager brain cranking:

• How do the top 13 match with my business risk?
• What emerging risk will be on my 2015 list?
• Is my advisor helping me deal with risk — or is she just trying to sell me insurance?

Businesses that fail to address the full picture of risk put themselves in danger of falling behind their competition. At HNI, we constantly are scanning the horizon for emerging risk, and we share our findings via HNI University, Steal These Ideas (the blog), and, of course, our most valuable asset: our people.

How do you stay on top of risk? What's missing from Lloyd's top 13? What surprised you about the rest of the risks on Lloyd's index? Please sound off in comments!

Related Posts:

Pinpointing Your Total Cost of Risk

Information Risk: What Every Business Owner Needs to Know

Who Has Your Blind Side When it Comes to Business Risk?

Do You REALLY Know Your Total Cost of Risk?