Australian SMEs face tough times and are increasingly likely to invest in risk analysis, according to a survey by Zurich.

“Of note for the insurance industry in Australia, about 7% of those surveyed have invested in some kind of risk analysis and risk assessment over the past year,” Zurich Australia EGM SME Bobby Lehane said.

Three of the most significant risks perceived by Australian SMEs are high competition (38% of respondents), low demand/overstocking (26%) and business interruption from the failure of partners and suppliers to deliver (14%).

“There’s a lot more we need to do as an industry for SMEs in areas such as business interruption,” Mr Lehane told insuranceNEWS.com.au.

“It’s the third most important risk identified, but we only have a 50% take-up rate. It’s way too low.

“People tend to think in terms of insuring only physical assets. Insurers need to work with brokers to highlight the need for business interruption insurance.”

Of the 250 Australian SMEs surveyed last year, the smallest – with up to nine staff – were four times more likely than larger firms (up to 250 staff) to have considered shutting, restructuring or reducing their business offering.

“Small business is very volatile,” Mr Lehane said. “If you lose a couple of important contracts, your company can close.”

He says businesses are growing more aware of risk in their environments.

More than 16% of SME respondents increased wages in the past year and 12% cut them, the survey shows.

About 17% reduced staff numbers, while 12% increased them. About 14% expanded into new export markets.

Other perceived key risks include theft (18%) and damage to property from natural catastrophes (11%).

About 45% of SMEs say new customer segments are the standout opportunity, along with cost reduction (29%), expansion into foreign markets (24%) and acquisition of competitors (14%).

About 18% see opportunities in new business technologies such as mobile and tablet computing and 16% in sales channels such as online.

However, only 6% consider online fraud and other cyber crime as a risk.