Terrorism threat: Small businesses, large impact.

Jun 14, 2024

At the start of 2021 there were 5.5 million small businesses in the UK, equivalent to 99.9% of all businesses. With a combined annual turnover of nearly £2.3 trillion and employing approximately 16.3 million people, the protection of the SME sector is vital.

Leisure, tourism and hospitality make up some of the largest sectors and are particularly susceptible to the effects of terrorist attacks.

But we’re a small business. Why insure against a terrorist attack?

 

Incidents in Manchester and at London Bridge hit smaller firms hard. Small businesses are generally more vulnerable to significant commercial disruption than larger firms. However, a 2019 study into the 2017 Manchester arena attack and its effects on local businesses found that incredibly, 43% businesses in the area still had little or no terrorism insurance cover, crisis plans or procedures in place. Indeed, the FSB estimates the take-up of terrorism insurance in general among SMEs is less than 5%.

If you think that your business is too small to be the target of a terrorist attack, you may be right. But it may well be that your business could be impaired by the effects of a nearby attack, suffering the effects of collateral damage or a denial of access.

The cost of Terrorism:

 

Experience tells us that SME businesses could face a range of impacts following a terrorist attack, including :

  • In the aftermath of a terrorist attack, police cordons or other restrictions could prohibit access to a premises or office building for several hours to several days, even if the direct target of the attack is not the business itself.
  • Following the Manchester arena attack in May 2017, Manchester Victoria train station and its businesses remained closed for a week. In the same year, London Bridge station was closed for several days as a result of the police cordon following a terrorist attack at Borough Market.
  • Following that attack in Borough Market, 153 stall owners were prevented from accessing their premises, with losses estimated at more than £1.4 million. Stalls and businesses in the area were forced to cease trading for 11 days, with some reportedly losing up to £100,000.
  • European cities saw a reduction in tourism following the attacks in 2017, as worried tourists cancelled their trips. One city saw 40% of hotel bookings cancelled over one weekend. Cafés and restaurants were forced to close for several weeks and, in one case, for four months.