SME Blog: Hong Kong SMEs need cyber protection to align with digital ambitions
QBE Blog: Hong Kong SMEs need cyber protection to align with digital ambitions
While it is encouraging to see so many small to medium-sized enterprises (SMEs) in Hong Kong investing in digital initiatives, the rise of digital workflows and processes inevitably makes businesses more vulnerable to cyber threats.
QBE’s research* conducted at end of 2022, raises some concerns around the decrease of Hong Kong SMEs’ cyber risk awareness to 36% from 43% in 2021, despite a rise in the number of cyberattacks.
Over the past three years, the adoption of digital technology has become a part of the new normal for many Hong Kong enterprises. Our survey shows that 62% of SMEs had become more digitalised in 2022, compared to 57% in 2021.
That modernisation looks set to continue over the next 12 months with 23% of SMEs planning to spend on digital marketing, 23% intending to invest in their e-commerce platform, and 22% looking to purchase software that would enable their staff to better collaborate.
The planned investment coincides with growing optimism on the overall business outlook, which I wrote about in my last blog.
E-commerce has contributed greatly to the digitalisation of Hong Kong’s SMEs, as 82% of companies now buy and/or sell goods or services over the internet. Social distancing measures during the pandemic helped accelerate this trend.
Revenue from e-commerce surpassed traditional channels with 51% coming from digital channels and the remaining 49% from offline business in 2022. SMEs are expecting this pattern to continue into 2023.
The shifting focus to e-commerce brings new challenges, with 31% citing increased competition and 22% citing data security threats.
Concerns about cybercrime are well-placed with a 9% increase in security incidents in 2022, according to statistics from the Hong Kong Computer Emergency Response Team Coordination Centre (HKCERT). In light of this, it is worrying that one in ten SMEs remain without processes or protection against cyber risks, and only 29% have cyber insurance protection.
With the continued increase in cyberattacks and the growing complexity of security breaches, companies need multiple tools and strategies to keep their business systems and data secure. Software and staff awareness are essential, but SMEs should not overlook the value of cyber insurance as part of their risk management strategy.
Many Hong Kong businesses still lack awareness over the insurance products available to help them manage newer and emerging risks. The onus is on insurers and brokers to educate our SME customers on the most appropriate coverage for their risk profiles, and to make the purchase process – online or otherwise, as seamless as possible.
Hong Kong’s SMEs are becoming more comfortable purchasing insurance online, rising from 32% in 2020 and 37% in 2021 to 43% in 2022. SMEs said their main reason for buying online was because it is easier to use, responses are quicker and that it saves time. This is an area QBE is investing in.
We wish all Hong Kong’s SMEs a successful 2023. The QBE team and I remain at your disposal to discuss any issues raised in this blog or to help address any insurance concerns.
Lei Yu, Chief Executive Officer for North Asia and Regional Head of Distribution, QBE Asia
*Commissioned by QBE Hong Kong, the SME Survey draws on the responses of 422 SMEs from a wide range of industries in October 2022