Regulation was also cited as a huge burden, costing, according to the British Chamber of Commerce, £10bn between 1997 and 2005. However, Royal & SunAlliance's Risk Uncovered Index2 identifies the biggest future risks facing UK businesses as predominantly stemming from problems close to home.
Strong competition in the market place has been the most influential factor affecting business activity over the past 12 months. This is predominantly due to greater competition from Asia, as the Chinese and Indian economies continue to boom. High oil prices are also a threat as is political upheaval in the Middle East.
Macro-economic factors are having a significant impact upon business activity, despite interest rate stability allowing for improved planning decisions and reducing the risk of debt repayments. The level of interest rates remains one of the 10 most influential risk factors on businesses.
Looking to the future, businesses surveyed by R&SA believe that power cuts are set to become the risk factor influencing business activity that increases the most. Britain is facing a shortfall of energy by approximately 2025. Power shortages are forecast to have their biggest impact upon service-based industries, because of their reliance upon information technology.
The proposed extension of the congestion charge in London, and the formulation of more pilot road charging schemes throughout the country next year, have increased business worries about future transport problems. Unsurprisingly, transport and communications firms expect transport problems to increase dramatically over the next 12 months.
Jon Woodman, director of risk solutions at R&SA, comments: "Economic growth in Asia and India has had the greatest impact upon the current business environment, but the fastest growing risks are closer to home. UK businesses need to be prepared to protect themselves against these future risks, which could potentially cost them millions".