The business environment in New Zealand is one of the world's most stable. Our GDP has been growing by a steady rate for several years now and most signs point to a bright future. Considering the proliferation of uncertainty and instability going on around the world right now, we're lucky to be operating in such a positive economic landscape.
However, the fact is doing business in our beautiful country still comes with uncertainties that can present serious threats if they're not managed correctly. With the ultimate goal of helping businesses identify and mitigate risk, we've had a look at a few of the biggest threats facing Kiwi businesses in 2017.
The BDO Global Risk Landscape report paints a clear picture of what business risks are in 2017.
1. Cyber security
"There are only two types of companies, those that have been hacked and those that will be hacked", so the FBI quote goes.
While businesses in NZ may feel removed from what’s going on internationally, cyber risk is a fact of life if you’re in business. Only about 6%* of small businesses in New Zealand (those with between one and 20 employees) have some form of cyber insurance. That is despite the fact that 18% of them have suffered some form of cyber attack.
2. Interest rate rises
Interest rate rises and concerns about an asset bubble lurk below, an ever-present risk in New Zealand's economy. Recent comments from Reserve Bank governor Graham Wheeler, have done little to allay these worries. In a rare public speech he commented on the likelihood of official cash rate (OCR) changes:
"In effect, there is an equal probability that the next OCR adjustment could be up or down. We consider the balance of risks for the global outlook to be downside. For the domestic economy, there is some potential upside for output growth if migration and commodity prices turn out to be stronger than forecast, but the risks around inflation look balanced."
After a sustained low in interest rates, a rise in the OCR and market rates would certainly shock businesses, especially those with high levels of exposure. Looking closely at your debt is essential in this time of uncertainty as you may need to take action to protect yourself if rates suddenly change.
3. Natural catastrophe
Even before the Kaikoura quakes natural catastrophe was seen as a serious business risk. It's no wonder as 2016 was a record breaking year for New Zealand earthquakes with GeoNet recording over 32,000 quakes.
After the Wellington and Kaikoura quakes several businesses were displaced or forced to stop trading. These disasters revealed the importance of business interruption and property insurance, as several businesses were left out to dry due to inadequate cover.
Are you managing your risks well?
A shockingly high 78% of respondents in the BDO Global Risk Landscape survey said they believed the world was becoming a riskier place for businesses. And it's true, there will be an element of risk involved in nearly everything you do. However, with the right advice and insurance products tailored to suit your needs, you don't have to let his affect your bottom line or your success.
Here at Rothbury Insurance Brokers, we specialise in identifying your businesses unique exposure to risk and tailoring cover to protect you even if the worst happens. We've been helping safe guard New Zealand businesses for over 60 years now, and would love to help with yours.
*Symantec Report 2016
About the AuthorName: Wayne Amer
I am a Senior Commercial Broker at Rothbury's Auckland branch. Having spent over 20 years in the insurance industry my passion is broking as it means I get to spend my time assisting and advising clients on insurance matters…
I am a Senior Commercial Broker at Rothbury's Auckland branch. Having spent over 20 years in the insurance industry my passion is broking as it means I get to spend my time assisting and advising clients on insurance matters that will help make their businesses sustainable and successful.Close