Singapore firms more risk averse than global peers

Research has found that Singaporean businesses are more worried about risk and less resilient than their global peers.

Beazley’s latest Risk & Resilience report reveals that business leaders in Singapore display an admirable respect for the risks they face but climate change needs to urgently move up the agenda.

Over a third (35%) of Singapore-based business leaders feel they operate in a high-risk environment - almost 10% more than global peers. And yet, less than a quarter (23%) report feeling highly resilient (in marked contrast to the US where 34% report feeling highly resilient).

“While Singapore itself is resilient… its dependence on global trade in the context of today’s volatile and uncertain world leads to a lack of confidence that is perhaps rooted not in itself, but in the knowledge that this part of Asia is only as resilient as its external trading partners and neighbours,” observed Byran Lee head of Partnerships and principal officer at Beazley.

Low risk tolerance

Post-pandemic, leaders of every size of business across ten industry sectors are uniformly less tolerant of risk and less trusting of both political governance and management decision making than in other territories that we surveyed.

The Singapore metrics also point to markedly less trust in institutions, corporate structures as well as insurers and the value of the insurance proposition.

Only 37% report increased trust in insurers, since the pandemic, for example – 8 percentage points down on the global comparison. This partly reflects the status of a market where the overall penetration of specialist insurance is much lower than in the US or Europe.

It may also reflect the fact that clients in Asia are in need of specialist insurance solutions fully designed for businesses operating in this region

Climate change needs to move higher up the risk agenda

Just 15% of those surveyed place climate change as their top environmental risk and only 27% feel very prepared to address this risk

Pandemic risk remains a big concern across Asia, but could it be that the focus on this immediate threat is deflecting businesses from looking at the long term problem of environmental risk?

Singapore’s risk and resilience matrix shows that all environmental risks, with the exception of pandemic, fall well below the Beazley Risk & Resilience high-risk category line. 

So it is reasonable to ask, are Singapore based business leaders complacent about environmental risks?

Lessons from the supply chain crisis need to be learnt

Singapore is a vital lynchpin in global supply chains and as an urban centre, it is heavily reliant on imports. These two factors are coming together to focus thoughts on supply chain risk and resilience. 

Over a quarter (27%) identify it as their top risk, while only 28% declare they feel ‘very prepared’ to deal with supply chain issues against a global average of 35%.

Lucien Mounier, head of Asia Pacific for Beazley commented: “Fortune may favour the bold, but in an increasingly uncertain world, the thoughtful approach that Singapore’s business leaders take to risk is reassuring. They are more aware of the risks they face and are more cautious about their levels of resilience.”

“On the issue of the environment and climate change, business needs to be bolder and actively invest in strategies to address environmental risks including focusing on the regulatory complexity of ESG reporting and the consequent liabilities that come with it.”

“While insurance is not a panacea for climate risk or a complete answer to creating a more resilient business environment, it is clear that as we move into in a world where more economic uncertainty seems likely, business leaders need to be able to rely on their insurers for support in building resilience.”