Risk managers are increasingly seen as key players in driving business innovation to ensure their firms survive in the face of increased competition. One only has to look at the likes of Uber and AirBnb to see how a sector’s competitive landscape can be disrupted quickly and aggressively. Only time will tell which industry is next.
”Today risk managers have to lool at managing risk across many geographical areas, involving diverse cultures and regulatory operating environments, and yet continue to be exposed to impacts such as cyber attacks that are not bound by any physical barriers.”
These are the thoughts of a Singapore-based risk manager, reflecting the modern business landscape faced by risk professionals across the region and perhaps encapsulating why ‘increased competition’ comes in as the number three top risk in StrategicRISK’s annual Asia Risk Report Benchmarking survey.
In such an environment, argues senior vice president and chief of insurance at Reliance Industries Saurabh Verma, “there is always another supplier or vendor waiting to take over the share of pie”.
Another risk manager from Thailand points out that increased competition not only threatens to harm a firm’s ability to capture more business but also to sustain existing consumers. “The changing economics, which consist of rising taxes and other stringent government measures such as anti- competition law are also strong factors that influence competition,” he adds.
Aon’s 2015 Global Risk Management Report named ‘increasing competition’ as the number four top risk in the world, but number one in Asia. Furthermore, says Aon’s regional head of sales and marketing, Asia, Jane Drummond, by 2018 the risk is projected to top the list globally. “While larger businesses may be able to fend off higher amounts of competition better than smaller ones with limited resources, all organisations regardless of size, see competition as a priority risk,” she says.
Increasing competition is closely interconnected with ‘failure to innovate’, which came in at number 10 in the 2015 SR top risk list.
Head of Lockton Singapore Peter Jackson says the fact that many markets in Asia are intensely price competitive, “forces companies to challenge anything that isn’t directly related to revenue”.
“So called support functions such as HR, legal and risk management suffer first, having manpower and budget constraints,” he says.
“As important is where time is focused, and limited resources means less time or no time spent on important but not urgent issues such as how risks are connected and how businesses need to look across functions and silos. It’s only after a major event has happened that many companies will think seriously about these issues, which is a bit late for shareholders.”
Chief security officer and advisor for Microsoft Asia Pierre Noel sees failure to innovate as part of the “shake-up that is happening in several industries, such as taxis with Uber and hospitality with AirBnB”.
“I know that other industries such as banks and insurance are wondering what’s next for them and feel the pressure to innovate very rapidly,” he says.
Nanyang Technological University assistant director, Office of Enterprise Risk Management Jeffrey Yeo sees failure to innovate as an emerging risk that is an indicator of the competitiveness of today’s business environment.
“Innovation may be the key in ensuring the continuation and sustainability of any businesses,” he says. “The importance of innovation is now on the radar screens of many business entities.”
Chief risk officer at Australian firm Scentre Group, Eamonn Cunningham, says: “Put simply, your competitors will be more of a challenge if they innovate and you don’t.”