Todays AWS outage highlights the cost of sudden business shocks | 76% of SME reserves wiped out by risk events, says Atradius

With today’s outage from cloud computing giant, Amazon Web Services (AWS) impacting heavily on the web services of many organisations around the world including those from HMRC, Lloyds Bank, Zoom and many others from ecommerce to financial services, Atradius warns that most UK businesses are dangerously underprepared for sudden shocks like this.

Rising insolvencies and supply chain shocks are quickly depleting emergency cash cushions, warns Atradius, one of the UK’s largest trade credit insurers.

UK SMEs face a widening resilience gap — the difference between the cost of escalating business risks and the limited accessible liquidity they hold to withstand them — according to a report by Atradius. Cash buffers that once offered protection are now stretched or exhausted by the costs of disruption, leaving many firms exposed.

New data from 1,000 senior decision makers¹ and 500 UK business owners and C-suite² reveals that business risks, such as supply chain disruption, customer insolvencies, cybersecurity and late payments, have cost businesses hundreds of thousands in the last 12 months — the equivalent of 76% of accessible emergency funds³. Worryingly, 17% of businesses with a turnover of £1.1–10 million have less than £50k to absorb a sudden shock.

Beyond emergency cash cushions, day-to-day resilience is also limited: 30% of firms have less than four months of operating cash flow, and 9% have under two months.

Some of the biggest risks identified in our research include rising costs, from energy bills to raw materials (51% of companies); political and policy shifts (33%), such as the lingering fallout from Brexit fallout, tax rises and Employer National Insurance Contribution increases; and AI-driven risks (32%), as firms navigate fraud, misuse, and regulatory uncertainty. The impact of this risky business environment spreads across supply chains. Customer fragility is identified as a major threat in our research: late payments are a threat for one fifth (21%) of businesses and customer insolvencies threaten 17% of firms.

%	Top five business risks according to UK business owners and C-Suite
51%	Rising prices of goods
42%	Cyber-security incidents (e.g., ransomware, data breach)
37%	Supply chain disruption (e.g. shortages, delays)
33%	Political/policy changes (e.g. Brexit, national budget changes, NI increase)
32%	AI-related risks (e.g., misuse of generative AI, AI-driven fraud, regulatory exposure)

The data comes against a backdrop of a third of businesses (32%) admitting they are not fully covered by trade credit insurance, with one in 10 (8%) not covered at all.  This rises to one in five (17%) for businesses with a turnover between £500k and £1 million. In fact, 56% of businesses say they rely on cash reserves to ‘self-insure’; a high-risk way of saving for unexpected business losses that can expose a business to large and unexpected losses.

As well as the resilience gap, SMEs also face an exposure gap, the difference between the cost of trade credit insurance and the potential financial losses they assume when self-insuring. SMEs that chose to self-insure faced risk costs that were more than 700% higher than the cost of a trade credit insurance premium³. Put another way, the average cost of self-insuring risk events was equivalent to paying over eight years of premiums in a single year.

In the last 12 months, 89% of businesses reported a significant impact from a range of risks, from supply chain disruption to unpaid or late customer payments. More than half (62%) of C-Suite and business owners surveyed said these risks cost their business more than £100,000 in the last year, while nearly one in five (19%) faced costs of more than half a million (£500,000+).

Reflecting on the impact these risks had on their businesses, one in five (22%) said it put their survival at risk, while almost half (49%) cited reduced profitability and 14% had to make redundancies.

With further tax rises and uncertainty on the horizon ahead of Chancellor Rachel Reeves’ Autumn Budget, two in five (41%) are concerned these risks will increase in the next year. One in 10 (8%) are worried about their future and are not confident they could absorb further shocks underlining how precarious the resilience gap has become.

James Burgess, Head of Commercial at Atradius UK, says: “This report is a wake-up call for UK businesses, and SMEs are particularly exposed. The resilience gap is widening, with many firms drawing on emergency cash reserves that may not last as the economic environment for businesses continues to be tough. With costs rising across the board, some assume trade credit insurance is unnecessary, but one failed payment from a customer could push reserves to their limits, leaving businesses dangerously exposed. Compared to the losses we’re seeing, it’s an investment that pays for itself. Our message to business leaders is simple: don’t wait for the next shock to test your resilience.”

Notes

1. 76% of their liquid or accessible emergency cash. On average, businesses surveyed say risks have cost them £226,020.20 in the last 12 months compared to an average of £297,525.20 available in liquid or accessible cash. This means that business risks amount to 75.9% of the liquid or accessible cash they have available. (Survey to 500 business owners and C-Suite)
2. Resilience gap by business turnover: (Survey to 500 business owners and C-Suite)

Annual Turnover	Emergency cash cushion (£)	Risk Cost (£)	% Resilience Gap
£500,000 – £1 million	143,333.3	190,000.0	-32.6%
£1.1 million – £10 million	229,500.0	157,425.7	31.4%
£10.1 million – £50 million	302,857.1	190,090.1	37.2%
£50.1 million – £100 million	299,127.9	249,360.5	16.6%
£100.1 million – £500 million	339,866.3	276,513.5	18.7%

3. Risks impacting business decisions in the last 12 months: (Survey to 1,000 business owners or senior decision makers)

%	Risk
51%	Rising prices of goods
42%	Cyber-security incidents (e.g., ransomware, data breach)
37%	Supply chain disruption (e.g. shortages, delays)
33%	Political/policy changes (e.g. Brexit, national budget changes, NI increase)
32%	AI-related risks (e.g., misuse of generative AI, AI-driven fraud, regulatory exposure)
31%	Currency fluctuations impacting trade
25%	Geopolitical risks (e.g. sanctions, trade barriers, tariffs)
21%	Unpaid or late customer payments
17%	Customer or supplier insolvency/bankruptcy
15%	Loss of a major customer contract