On the eve of the release of the World Economic Forum’s Global Risk Report 2019, risk thought leader, Gareth Byatt, looks at some of the major areas of concern for APAC risk managers for the year ahead.
Cybersecurity, Brexit, geopolitics and financial market fluctuations are among chief concerns for businesses voiced by some of the globe’s leading risk experts as they look ahead to 2019.
At the start of the year, senior members of the Institute of Risk Management (IRM) were asked to identify key risk areas for businesses for the year ahead. A broad range of financial, political and healthcare risks were highlighted.
Further areas of risk concern identified by IRM risk experts were the as yet unknown effects of Brexit in the UK and the impact of technology enabled disruptive business models.
“The impact of current macro trends and risks, such as cybersecurity, AI and Brexit in the UK will continue to put pressure on, and potentially change, entire business sectors,” says IRM Chairman Socrates Coudounaris.
“Leaders who think critically about the future, anticipate disruption to their sectors, while building resilience and agility in their models, will be in a better position to tackle a challenging risk environment in 2019 and thrive.”
“This year the IRM will place significant emphasis on supporting businesses and risk professionals in understanding, managing game-changing risks such as cyber; for example our new Digital Risk Management Certificate (developed with support from Warwick University).
Through the IRM’s qualifications, training and thought leadership -including the launch of the Cambridge Judge Business School and IRM research report: Perspectives of Global Corporations which highlights the top global risk management concerns over the next 12 months - we will encourage leaders to think tactically and strategically about change and to question whether and how a threat can be turned into an opportunity. Risk professionals will be key strategic advisers in this journey.”
Global Risk Predictions: Asia-Pacific
Gareth Byatt, Principal Consultant, Risk Insight Consulting, IRM Global Ambassador for APAC
It is interesting to look back at our predictions from 12 months ago – to compare and contrast with what we foresee for 2019.
Last year, for the APAC region as a whole we highlighted the threats of cyber risk, economic risk, and geopolitical uncertainty and instability. We also pointed out the opportunities that exist as the APAC region grows and advances. Cyber risk remains prevalent, and we continue to see economic volatility, linked to political instability affecting the region and globally.
A report published by the World Economic Forum in November 2018 underlined the key risks facing companies in the Asia-Pacific region over the next decade. Political and economic concerns predominate among businesses in South Asia, with cyber-attacks a key concern. Asset bubble risks are also feared in East Asia and the Pacific.
In October 2018 the International Monetary Fund (IMF) announced that it is downgrading its outlook for the world economy in 2019, citing rising interest rates and growing tensions over trade as factors. The IMF splits its forecast into advanced economies and emerging market and developing economies. In APAC the outlook is broadly positive. China, the dominant economy in the region, is forecast to have 6.2% growth in 2019. Australia is forecast to have 2.8% growth and the ASEAN-5 (Indonesia, Malaysia, Philippines, Thailand and Vietnam) are expected to grow by 5.2%.
Risk is about spotting and capitalising on upsides as well as managing downsides, and there are many opportunities in APAC in 2019 as growth continues and various industries continue to be disrupted. China’s policies and actions, and particularly its political and economic relationship with the US, will be a major factor to geopolitical and economic risks in APAC in 2019. This will particularly impact trade in the region.
To build upon what I noted last year, risk managers in APAC should help the organisations they are part of and work with to understand the specific uncertainties and risks that matter most to them. They need to evaluate scenarios, “join the dots” between risks, and ensure their organisations anticipate and adapt to seize opportunities and manage threats.
For example, during 2018 many organisations in APAC harnessed digitisation and managed digital risk, whilst there were also examples of organisations suffering significant cyber breaches. The focus on digitisation will continue into 2019, which should lead to innovative techniques in how we take and manage risk. This requires careful organisational change management, which risk teams should help to implement (the IRM’s Digital Risk Management Certificate can help with this).