The report is the second edition in the “Evolving Risk Concerns in Asia-Pacific” series, and also draws insights from our previous research covering societal ageing, infrastructure and cyber risks.
The top risks concerns for executives in Asia-Pacific have largely remained unchanged from 2016 to 2017. Cyber and socio-political risks have increased in importance against a backdrop of ongoing major economic concerns such as high unemployment, energy price shock and asset bubble.
These top risks, however, are continually shaped by six ongoing disruptive trends. These are (1) Economic inequality, (2) Demographic pressure, (3) International security concerns, (4) Complex economic transitions, (5) Environmental risks and climate change, and (6) Technological advancements. These trends are deeply interconnected and can exacerbate each other. Events linked to one risk can spark a domino effect that will have unexpected and far-reaching consequences across the region.
Facing this complex and evolving risk landscape, business leaders should:
· Anticipate disruptions from rising economic inequality. This entails reviewing and improving labor relations across the organization, investing in upskilling the existing workforce in line with emerging trends and developments, and proactively anticipating policy adjustments
· Prepare for the impact of political developments on international trade. Businesses should pay close attention to any early signs of growing trade protectionism and pursue the creative use of risk transfer solutions such as political risk insurance
· Build climate resilience. Climate change adaption should be built in as an integral part of the organization’s Enterprise Risk Management framework, taking into consideration supply chain resilience and potential regulatory framework shifts
· Accommodate technological change. Business leaders need to be aware of the potential benefits of emerging technologies as well as mitigating associated risks. These range from industry-wide impacts such as market disruption and regulatory changes as a result of shifting liabilities, to operational risks such as cyber-attacks and implementation failures