The manufacturing sector has long been a symbol of resilience and innovation. However, manufacturers are now facing a more complex and challenging risk environment than ever before. Drawing on findings from Gallagher’s latest Business Risk Index – based on insights from 1,000 UK business leaders – Neil Hodgson, Managing Director of Risk Management Solutions & Business Assist at Gallagher, explores the challenges currently facing manufacturers and what organisations can do to strengthen resilience in an increasingly uncertain environment.
The research highlights the unique pressures reshaping today’s commercial landscape and for manufacturers the high cost of materials is the standout concern, cited by 88% of respondents. From raw materials and stock to essential components, rising costs are placing immense strain on profitability. For manufacturers operating on tight margins, these increases are particularly difficult to absorb, often forcing tough decisions around pricing, production, and investment.
Closely following this is the high cost of operations, highlighted by 77% of respondents. Energy, rent, logistics, and other overheads are creating sustained financial pressures. For many manufacturers, these operational challenges are not just short-term hurdles but ongoing issues that require careful management to maintain competitiveness.
Adding to these pressures is the growing intensity of competition within the sector, with 66% of manufacturers identifying it as a key concern. Whether driven by new entrants, shifting demand, or decreased need for certain products, competitive pressures are prompting organisations to reassess their positioning and value propositions.
Overlaying these challenges is the burden of imposed costs, such as National Insurance increases, which 64% of respondents flagged as a significant issue. These additional financial commitments, often outside of a business’s control, can influence hiring decisions, investment plans, and overall growth ambitions.
Beyond these immediate cost and competitive pressures, manufacturers are also navigating broader risks such as regulatory changes, supply chain disruptions, and the challenge of adopting new technologies like AI. These factors not only impact day-to-day operations but also influence long-term strategic decisions, from hiring and training to innovation investment.
Taken together, these findings paint a picture of a sector balancing immediate financial pressures with longer-term strategic imperatives. For many manufacturers, the challenge lies not just in identifying these risks but in understanding how they interact and what steps can be taken to manage them effectively.
“Taking a structured approach to risk is becoming increasingly important. It’s not just about protecting against what might go wrong, it’s about giving manufacturers the confidence to move forward, even in uncertain conditions.” says Neil.
This is where working with an experienced insurance broker can make a tangible difference. By helping manufacturers assess their risk landscape holistically—from operational exposures and supply chain vulnerabilities to emerging risks—brokers can support more informed decision-making. With pressures coming from all directions, having a broader perspective can help manufacturers not only respond to today’s challenges but prepare more confidently for the future.
To download Gallagher’s full 2026 Business Risk Index report, please visit: www.ajg.com/uk/business-risk-index-2026
Arthur J. Gallagher Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered Office: Spectrum Building, 55 Blythswood Street, Glasgow, G2 7AT. Registered in Scotland. Company Number: SC108909. FP973-2026. Exp.02.07.2027
