The industry’s most pressing concerns were revealed at StrategicRISK/PARIMA’s Risk Forum Malaysia where more than 100 risk managers shared their views at the September event.
Malaysia’s leading risk managers say their five biggest concerns are changing regulation, an economic slowdown, political risk, a failure to innovate, and the threat of cyber attacks.
The industry’s most pressing concerns were revealed at Risk Forum Malaysia, out of a list of 25 problems facing the market. More than 100 risk managers shared their views at the September event jointly hosted by StrategicRISK and PARIMA and sponsored by AIG, Zurich and Generali.
May saw a transformative change in Malaysian politics as former Prime Minister Mahatir Mohamed emerged victorious in the country’s general election. The opposition party defeated the ruling Barisian Nasional coalition which had ruled Malaysia for 60 years. Following the election result, Malaysian risk managers believe the change in power is likely to have an effect on regulation and described it as their biggest concern.
Frashad Shah, head of risk management at highway concession company Prolintas, said the rankings “made sense” in light of recent political developments: “Following a change in government regulation is going to be reviewed. There is varying sentiment over where the government is heading.”
An economic slowdown was cited as the second biggest concern by Risk Forum attendants. The fears could be related to the change in government and a perceived lack of stability in the country. Political risk was ranked as the third biggest concern by Malaysian risk managers.
Suchitra Narayanan, group head of risk and insurance at Air Asia and PARIMA board member, said the recent political changes could have caused risk managers to cite an economic slowdown as a concern: “When you have sudden, unprecedented change, people will ask what it means for Malaysia. There may be a loss of confidence from investors. It is a question of overall sentiment, and people may be nervous about the effect on spending.”
Risk managers’ fourth biggest risk was a failure to innovate. Teresa Wong, chief risk officer at Zurich General Insurance Malaysia Berhad, said managers needed to stay on top of innovation. She said “innovation should be part of the fabric of any business and risk managers are being challenged to acknowledge the opportunities from innovative ideas that have not undergone the iteration/reiteration tests, as they view these as unchartered waters where unknown risks abound”.
The fifth biggest concern was the threat of a cyber attack. Zurich’s Wong said this issue would “head the pack” for her firm. She said: “Targeted cyber attacks are simply the great unknown - we will only realise that we were the target when it happens and not anytime before that. A cyber attack can have a devastating impact on the business, and while mostly there is awareness of the risk, definitive and structured proactive measures are not taken seriously enough. Malaysians tend to have an “it will not happen to me but to the guy-next-door” mentality.”
Wong added cyber threats have the potential to impact company returns and consumer confidence: “Failure to accord the necessary attention from the business, including at board levels, to recognize the high likelihood and high impact of cyber attacks may culminate in aggregated risks of financial exposure and worse, the loss of reputation and trust from customers.”
Shah of Prolintas said cyber was a crucial issue in the current market. He said the “rising number of cyber attacks around Malaysia” kept the topic front of mind, despite not experiencing problems in his business.
Overall, Air Asia’s Narayanan said she empathised with the industry’s top five concerns: “Every organisation is different and industry-centric, but I agree with the general sentiment. Risk managers have implemented their strategy in recent years and are now thinking about what is next.”