5 most common threats to MSMEs and the best way to address those

The importance of micro-, small-, and medium-sized enterprises (MSMEs) to the national economy could never be overlooked or underestimated. Of the total 957,620 businesses operating across the country, MSMEs account for 99.51% or 952,969, according to the Philippine Statistics Authority’s (PSA) 2020 List of Establishments. Micro enterprises comprise of 850,127 or 88.77% of total MSMEs, while small enterprises account for 10.25% (98,126), and medium-sized enterprises take 0.49% (4,716).

Just like in most other countries, Filipino MSMEs are considered risk-takers. Aside from the great challenges brought about by competition from the major companies and among fellow MSMEs, small-scale entrepreneurs are also facing inevitable risks brought about by phenomenal occurrences brought by nature paired by the threats by robbery or scammers.

Thus, local MSMEs have to be prepared and resilient in facing these five top threats that may affect, or even destruct, their businesses:

1. Robbery/ Burglary

Theft is the most prevalent crime in the country, according to the 2021 data from Statista. MSMEs are not spared from theft as these businesses are more exposed to con artists, scammers, and thieves. The volume of incidents has somehow declined amid the pandemic, but many small and micro-entrepreneurs are not spared from cyber frauds as more transactions have shifted to cashless or electronic payment modes.

2. Typhoons

Geographically, the Philippines is located in the western Pacific, which is within the world’s ‘typhoon belt,’ a region where nearly a third of the planet’s tropical storms and typhoons form annually. Each year, an average of 15 to 20 typhoons hit the country, and several of those are truly destructive, being in the ‘super typhoon’ category. MSMEs are usually the hardest hit when a strong typhoon devastates an area—destroying the physical stores or sites of such business through torrential rains and strong winds.

3. Floods

Climate change is taking its toll on all businesses in the country, especially MSMEs. Floods are common when there are strong typhoons hitting an area but in more cases, flooding occurs even in the absence of such weather phenomenon. During the Southwest Monsoon season (from June to September) each year, continuous rain could spur flooding in many areas across the western portions of the country.

On the other hand, during the Northeast Monsoon season (from October to January), floods may occur due to continuous rains in the Northeastern and eastern parts of the archipelago. At times, thunderstorms in a locality (regardless of monsoon season) could suddenly cause flash floods, affecting small business operations.

4. Earthquakes

The Philippines is also located in the Pacific ‘ring of fire’ region wherein earthquakes and volcanic activities are more common than anywhere else in the world. Every year, a handful of strong earthquakes hit some parts of the country, destroying properties—including establishments owned by MSMEs. Unlike typhoons and floods, earthquakes are unpredictable and could strike any random city or province without any warning.

5. Fire

The last and among the most common threats to local MSMEs are fires. Those could be brought about by nature (when caused by lightning) or by accidents (faulty electrical lines, overheating of appliances, or uncontrolled fire sources like lighted candles, match sticks, or stoves). Physical damage to businesses brought about by fires is often irreparable, with the establishment usually brought down into ashes. Many MSMEs that operate within commercial sites like malls are also affected when such centers are hit by fires.

Such catastrophic events could compromise business operations, growth, and recovery of MSMEs. Though the local and national governments have assistance programs to help entrepreneurs rise up after being affected by disasters, it is still best if business owners would take the initiative to take another level of protection—not just for their selves but also for their businesses. This is where the importance of insurance sets in.

MicroBiz Protek Jr.

Cebuana Lhuillier, the country’s leader in providing microinsurance, offers MicroBiz Protek Jr. for Filipino MSMEs and startups. The product is a cash-assistance benefit that covers property damage caused by any of these five identified risks and threats. As a microinsurance offering, premiums are very reasonable to be easily afforded by MSMEs—for as low as ₱105 for a yearlong coverage!

The table below summarizes the claim benefits per available plan:

	Plan A	Plan B	Plan C
Fire/ Lightning	₱10,000	₱25,000	₱50,000
Typhoon	₱10,000	₱25,000	₱50,000
Flood	₱10,000	₱25,000	₱50,000
Earthquake	₱10,000	₱25,000	₱50,000

Cebuana Lhuillier MicroBiz Protek Jr. provides 10% of the total sum insured in case of robbery or burglary. It even provides Personal Accident benefit covering the business owner and 1 employee—10% of the total sum insured for the owner and 1 employee.

Moreover, MicroBiz Protek Jr. also provides Emergency Assistance through AXA Philippines’ EMMA App (the microinsurance product is underwritten by AXA). This means the insured MSME has unlimited access to emergency assistance accessible 24/7 through the hotline at any time during the coverage period.