Are Australian businesses doing enough to mitigate risk?
Understanding and managing risk is essential to business continuity. But Vero’s 2025 SME Insurance Index found most businesses lack formal risk management processes.
Risk is often off the radar
According to the findings of the 2025 Index, a staggering 90% of businesses lack a structured approach to risk management, and just 2% have optimised their processes into documented strategies with continuous auditing.
While a majority of large businesses have risk management processes in place, a proportion of large and medium businesses lack even basic risk procedures.
One in 10 larger businesses lack an enterprise-wide approach to risk management or an Enterprise Risk Management framework. This can mean risks – for example those related to products or people – are assessed in isolation, rather than holistically.
Let’s hear what businesses say about risk analysis.
Turning up the frequency
The Index also shows limited use of risk analyses. A majority of businesses have never conducted a formal risk analysis, and only a few perform these regularly.
While larger businesses are more likely to conduct risk reviews, a number of medium businesses and larger businesses admit to rarely or never reviewing their risks.
The impact on insurance
The findings of the 2025 Index show these factors have a direct impact on overall insurance behaviours. While the proportion of businesses without formalised risk management processes is relatively small, these businesses are twice as likely to be intentionally underinsured in order to reduce their operating costs.
Interestingly, the Index finds that broker usage doesn’t automatically translate into better risk management practices. Both broker users and non-users have similar levels of maturity when it comes to their assessment of their risk profiles.
Brokers can make a difference
Businesses whose broker offers guidance on emerging risks or adapt to changes in their business models are significantly more likely to have structured risk management strategies, highlighted by the following insights from the Index:
- 65% of businesses with formal strategies indicate their broker advises on emerging risks, compared with 55% of those with informal or basic measures.
- Similarly, 65% of businesses with formal strategies also indicate their broker offers proactive advice on changes to a business model, versus 53% of those with informal or basic measures.
My broker suggesting a risk analysis in a formal way would be really, really valuable. If they would come out and spend time doing a risk analysis and understanding our business, it would be something we would find really beneficial.
– Michelle, Motor Repair, Medium Business, Medium Broker User
Consider take action today
The Vero SME Insurance Index presents two clear pathways for brokers to consider taking in order to strengthen their services and maintain their competitive advantage:
- Showcase expertise
Use specific examples to demonstrate the nuanced service a broker can offer, while helping clients to understand the long-term value of advice and the potential cost savings of a robust policy - Drive Risk Education
Help businesses see risk analysis and a formalised Enterprise Risk Management program as critical tools in helping to protect their business from risks. Help them identify and manage risks, showcasing how tailored procedures and systems can mitigate vulnerabilities.
For more insights into the behaviours and attitudes that shape the insurance decisions of Australian businesses, watch the Vero SME Insurance Index Webinar or download the full report today.
AAI Limited ABN 48 005 297 807 trading as Vero Insurance (Vero) has commissioned the 2025 SME Insurance Index Report. The information in this article and Report is intended to be of a general nature only. Subject to any rights you may have under any law, Vero and its related bodies corporate do not accept any legal responsibility for any loss or damage, including loss of business or profits or any other indirect loss, resulting from any reliance upon on it - please make your own enquiries. Vero and its related bodies corporate do not guarantee the accuracy, reliability, completeness or currency of the information provided. Any advice has been prepared without taking into account your particular objectives, financial situations or needs, so you should consider whether it is appropriate for you or your business before acting on it. The information is not a recommendation or statement of opinion about whether a reader should acquire insurance from Vero (or its related bodies corporate) or services from any insurance intermediary or otherwise alter their business arrangements. Readers should confirm information and interpretation of information by seeking independent advice.
