Risk managers in the Asia-Pacific region need to focus on explaining to senior executives that risk management is an enabler to help achieve objectives rather than blocking progress, according to the Institute of Risk Management (IRM).
The IRM’s recently published predictions for 2020 said that Asia-Pacific risk managers must help business leaders understand uncertainty as an important part of working out how to deliver “purposeful and sustainable” objectives and growth.
They also need to help build strong and healthy cultures and support the delivery of good resilience management in this increasingly uncertain economic, regulatory and political environment, added the IRM.
Gareth Byatt, IRM global ambassador for APAC and principal consultant at his Sydney, Australia-based firm Risk Insight Consulting, said that identifying and following through “purposeful” objectives is more important than ever given the recent economic uncertainty in Asia-Pacific.
Mr Byatt points out that in its latest East Asia and Pacific Development Update, the World Bank says that economic growth in the region is expected to continue to decelerate in 2020, but will still be at an average of 5.7%.
The recent World Economic Forum Global Risk Reportand Allianz’s annual Risk Barometer clearly show that political and economic concerns, not least the US-China trade war, are fast rising up the agenda for businesses in Asia-Pacific and cyber risk is now competing with business interruption for top slot.
“What are some implications of these and other economic and geopolitical forecasts for risk professionals in Asia-Pacific? We know that managing risk well is about spotting and capitalising on opportunities as well as managing the threats that matter to us. So, we need to help our organisations to understand economic opportunities whilst being able to manage the threats they face (and understand the controls they can use to do so),” said Mr Byatt.
Achieving purposeful and sustainable objectives are more important than ever, according to the IRM ambassador. “There are only ten years left to achieve the targets set for the United Nations Sustainable Development Goals (SDGs). In September 2019, world leaders at a global SDG Summit called for ‘a decade of action and delivery’ (2020-2030) for sustainable development. What can businesses do to play their part in this?” he asked.
Mr Byatt said that businesses in Asia-Pacific, both large and small, need to work out how to be “mindful and considerate” of society, and how to achieve relevant sustainability objectives. “It’s not easy to change the ethos of an organisation to embrace objectives that are more holistic than shareholder financial returns, but ensuring organisations re-orientate their purpose towards societal and sustainability outcomes, together with appropriate financial targets, is going to be key,” he said.
Risk managers need to help people within their organisations understand all aspects of sustainability, and therefore help people develop and implement specific action plans to achieve successful outcomes. Risk managers can be “re-framers” for organisations, working with sustainability teams and leaders at all levels, he said.
Organisational culture will continue to be an important area of focus for risk professionals in the Asia-Pacific region in 2020, according to Mr Byatt.
“It sets the platform for sustainable performance. We saw examples in 2019 (and in previous years) of good organisational culture, and examples of where culture has been exposed to be inadequate – for example, what was revealed about the Australian financial sector in the Australian Banking Royal Commission Final Report, which was released in early 2019,” he pointed out.
To help create positive culture, risk managers need to be willing and able to speak up when necessary. They also need to bold and decisive, suggested Mr Byatt.
“Risk professionals can play a valuable role in helping their organisations to nurture a positive and healthy culture – where speaking up is welcomed, and a clear line of sight about risks exists, with accountability clearly understood and actions taken to lead to good outcomes. As organisations continue to increase their agility to respond to fast-changing economic, geopolitical and societal demands, ensuring these organisations have a healthy culture is key. Good risk management approaches such as proper use of risk appetite can help organisations to ensure they have a strong culture and that good decision-making is consistently applied,” he said.
Resilience management and the willingness to assist communities and society in the event of matters such as natural disasters is another important goal for risk managers in 2020, according to Mr Byatt.
“Resilience is required in many ways in today’s world, from managing complex supply chains to being prepared and ready to respond to natural disasters and a changing climate. Will we see more natural disasters in the Asia-Pacific region (as well as elsewhere) in 2020? We witnessed many natural disaster events in the Asia-Pacific region in 2019 (and, indeed, in the years before), and we are seeing a continuation of them continue in 2020. Recent examples are the terrible and catastrophic bushfires in Australia, which are unprecedented in their scale, plus the continuing relentless drought in that country, and the devastating flooding in Jakarta, the worst seen there in a decade,” he said.
“I think an important element that risk teams in different organisations can focus on is to help all stakeholder groups in their organisations, and those that work with them, to prepare for such events in the most appropriate, risk-informed way. Also, can businesses be in a position to assist major relief efforts when major natural disasters occur, as part of having a societal purpose? This question applies to all businesses, large and small, and organisations such as government bodies and community organisations,” concluded Mr Byatt.