Risk management gathering pace in Asia

In less than 20 years, the Asia Pacific region will represent 40% of the world’s GDP, larger than the US and EU combined, according to Towers Watson. Asia continues to attract investors in large numbers who strive to capitalise on the opportunities there. And as growth continues, the need for strong and efficient risk management systems has become ever more important.

But the depth of training and standard of risk management is patchy and levels of sophistication vary from country to country. Malaysia and Singapore appear relatively advanced, with associations such as the Asia Risk Management Institute in Singapore and Malaysian Association of Risk and Insurance Management (MARIM) offering a range of certified programmes. But further north of these countries in Thailand and the Philippines, risk management education is still in its infancy.

There is, however, the appetite and commitment to improve standards, according to Franck Baron, general manager for risk management and insurance at leading international healthcare, medical assistance and security services company, International SOS.

In April, Baron set up the pan-Asian risk management association, Pan-Asia Risk & Insurance Management Association (Parima) to champion improvements and strengthen representation of profession.

He says: “There is actually stronger demand in Asia compared to, for instance, Europe or the US, for this kind of certification because there is definitely a need for official recognition for the risk management community, so this certification project is for me a must-do.

“Professional certification is a way for risk managers to have a better platform to convince their management to develop risk-management frameworks, but it’s also for people who are a little less comfortable to champion this to get a better facility to convince people that they deserve to get a larger scope of responsibilities.”

The challenge isn’t just increasing numbers of certified programmes across the region. The other issue is that companies are implementing practices using various risk management standards. This was the case in Malaysia not too long ago, according to MARIM chairman Mohamad Zain.

He says: “Organisations in Malaysia have been practicing risk management well before the Code on Corporate Governance was established in 2000. When the code was established, Plc companies scrambled to implement risk management practices using various standards including the famous ANZ4360 and COSO Enterprise Risk Management Framework. Framework and practices were not harmonised and I believe regulators have a tough time in benchmarking risk management implementation standards across Plc.”

However, he explains that since Standard Malaysia adopted the risk management standard ISO31000, risk management practices and benchmarking have improved.

“With MS ISO31000, it really helps to accelerate the institutionalisation of enterprise risk management since all companies are using a single standards and framework where benchmarking among peers can be done actively,” he explains. “Having been involved in finalising the ISO31000 standards, I truly believe that other countries in Asia Pacific should actively convert their risk management framework to ISO31000.”

While the standard is beginning to gain acceptance and has helped improve risk management training in some countries, take up of the ISO31000 varies across the region. 

Carolyn Williams head of thought leadership at Institute of Risk Management says: “ISO31000 is viewed as the world standard in risk management. It has started to be written into corporate governance codes and has influenced a lot of the training on offer, bringing terminology, approaches and processes in line across the world.

“Countries in Asia Pacific have been adopting it but there’s a lot of variability – but there’s variability in the UK and Europe as well. Some organisations, particularly if they’re committed to standards in other sectors, will be used to working to systems and processes – it is integrated into their culture. But other businesses don’t think in those terms so they will be slower to adapt.”

The drive to improve risk management standards is gathering pace with Malaysia and Singapore providing examples of good practice. But there is still some way to go before we see the similar advances in other parts Asia. However momentum is stronger than ever and the outlook appears promising with the establishment of Parima representing the Asia-Pacific risk management community.