Businesses across the UK are facing increasing commercial risks year on year. Supply chain instability, advancing cyber threats, inflation, and fast-paced regulation changes are escalating the pressure on organisations of every size, with some having to cease trading as a result.
According to PwC, insolvencies increased by 0.85% in August 2025 to 16,360, up from 16,223 in August 2024, a clear indication that financial and commercial risks are continuing to rise in the UK. Without the right support and protections, these pressures could place your business at risk.
In this article, our commercial law experts will explain how to identify commercial risks and their early warning signs, and how partnering with a solicitor can help your business stay proactive rather than reactive.
What Are Commercial Risks?
Commercial risks are defined as possible threats that may negatively affect a business’s financial, operational, or reputational position, preventing the organisation from achieving its goals and maintaining marketplace viability.
Commercial risk is a key component of any risk management strategy, helping to maintain profitability and long-term security. If a business isn’t identifying, assessing, and mitigating potential threats, it is at risk of business disruption, or in severe cases, business failure.
Below are six commercial risk examples to be aware of when creating a robust risk management strategy.
The 6 Main Commercial Risk Examples
1. Contract & Legal Risks
It’s essential that all contracts and important legal documents are read thoroughly to gain a full understanding of the terms and conditions. Without this step, you’re at risk of breaching the agreement, which can have serious financial and reputational consequences.
Therefore, it’s vital to ask questions when you’re unsure about anything. For example, if a contract has been poorly drafted by a supplier, it may include unclear terms and liability gaps, which could also leave your business at risk.
2. Financial & Credit Risks
With so many businesses already under financial pressure due to economic changes, between customers being unable to pay for products and services and suppliers filing for insolvency, cash flow interruptions can become a significant commercial risk.
3. Operational Risks
When relying on other businesses, it’s important that you work with a trusted provider and sign an agreement that is fair and protects your business. Otherwise, when supply chains break down, outsourcing failures occur, or quality control issues arise, time, money, and resources are wasted.
4. Cyber & Data Protection Risks
It’s estimated that up to 1.5 billion records could have been breached in September 2025 due to cyber attacks. With so many processes now being digital-first, protecting your organisation against cyber threats has become more important than ever.
Whether it’s a breach of GDPR, phishing, or a loss of customer data, this can negatively impact your business’s image and may result in large fines.
5. Regulatory & Compliance Risks
Regulations and laws are being updated all the time, making it difficult to stay on top of them if you’re busy running your business. However, it’s crucial that all business and industry laws are followed to avoid non-compliance and potential penalties.
6. Reputational Risks
A brand’s reputation plays a big part in its success, and that’s why reputational risks can sometimes be one of the most difficult to fix. From social media complaints, public disputes between customers or suppliers, to poor complaint handling, how businesses prevent reputational risks can make or break the organisation.
Early Warning Signs Your Business is Exposed to Risk
Now that you know the six key commercial risk factors to look out for, here are some early tell-tale signs your business may be at risk:
- Contracts you don’t fully understand
- Supplier missed deadlines or had payment issues
- Outdated terms and conditions
- No written agreements for key relationships
- Heavy reliance on a single supplier
- Staff unclear about compliance rules
- Rapid growth without governance systems
How a Solicitor Helps Manage & Reduce Commercial Risks
Trying to identify and address these challenges while also managing daily business operations can be daunting. That’s why partnering with an experienced commercial risk solicitor can help relieve the pressure and give the reassurance that your business is in safe hands.
1. Reviewing & Drafting Contracts
Reviewing and drafting contracts can be time-consuming, not only because of their length but also because of the technical language often used.
A solicitor will be able to quickly and effectively identify hidden liabilities and flag any potential areas for concern or discussion. They can also support you in strengthening indemnities, warranties, and limitations of liability, while ensuring your business’s termination rights are protected.
2. Negotiating Better Terms
Whether you’re sending or receiving contracts, negotiations may be necessary to ensure the terms are fair and beneficial to your business.
When you work with a solicitor, the bargaining power between both parties is equalised, meaning they will help to ensure that unfair clauses are addressed and rectified while guaranteeing proportional risk allocation.
3. Setting Up Risk-Reducing Procedures
Due diligence is a crucial step when preventing commercial risk, and a solicitor can support businesses with annual contract audits to make sure all conditions are being met or assess if terms need adjusting.
Solicitors can also help businesses with creating standardised procedures and tailored policies, whether that’s for fraud prevention, data protection, or procurement.
4. Protecting Against Supplier or Customer Failure
As we’ve already touched upon, today’s marketplace can be extremely volatile, for both suppliers and customers, meaning payments can sometimes be missed or left unpaid.
Partnering with a solicitor will ensure robust supply chain agreements are built to provide financial security. A solicitor can also support with the creation of a contingency plan if something goes wrong, meaning you’re always prepared despite potential risks.
5. Dispute Avoidance & Early Intervention
Although we’ve established some early warning signs of commercial risks, if you’re too busy to spend time identifying and analysing potential risks, they can quickly become a big problem.
A solicitor can take away the pressure of trying to find and assess these issues, and they will work to spot potential problems before they escalate, saving you both time and money, whether that’s during negotiations or utilising mediation when needed.
When Should a Business Speak to a Solicitor?
But when exactly is the right time to involve a solicitor to help prevent commercial risk? Here are some examples of when you should speak to a solicitor:
- Before signing any major contract
- When entering a long-term supplier agreement
- When expanding or scaling
- When relying on contractors or third parties
- When experiencing repeated operational failures
- When you suspect a dispute may arise
Proactive Legal Support Saves Time, Money & Stress
We hope you found this guide useful and now have a clearer understanding of what commercial risks are, the warning signs to watch out for, and how a solicitor can help your business stay protected.
If you’re in the process of reviewing your business risks, early legal involvement can help save significant time, money, and stress in the long term. At Harding Evans, we’ve been solving commercial challenges for 160 years, supporting businesses in staying secure, compliant, and equipped to achieve their business goals.
If you’d like tailored guidance on how to prepare for and prevent commercial risks, drop us an email, or call our Cardiff office on 029 2267 6818 or our Newport office on 01633 244233.
