The risk manager is often the first casualty as Asian companies down-size, retrench, merge and consolidate, as Levi R. Rebanal explains.
From South Korea and Japan in the north to Thailand and Indonesia in the south and the countries in between, Taiwan, Hong Kong, the Philippines, Malaysia and Singapore, economic turmoil is wreaking havoc on everyone in the region - differing only in degrees. Once called the Asian tiger economies and the fastest growing region in the world, these Asian countries are just shadows of their old selves.
As Asian companies down-size, retrench, merge, consolidate or declare bankruptcy, the risk manager is one of the first casualties in the corporate re-engineering. Because the benefits of risk management are long term and often intangible, corporate management - eager to please stockholders with short term results or to put the bottom line in black - tends to look at the risk management function as superfluous and a cost centre, rather than as an instrument for cutting costs, boosting growth and enhancing profitability by preserving corporate assets and effectively controlling risks.
The result is that the risk manager or his or her staff get the axe first, or the department is downsized or its budget is reduced to the point of becoming ineffective before other departments are touched. The fact that risk management is relatively new - and its functions not so well defined - is another reason why management does not take a second thought at abolishing it.
The Asian risk manager must face these challenges with a stout heart and try to reinvent his role in light of these economic difficulties by becoming more proactive and holistic in his approach, so that he and his department are seen not as a cost centre for insurance buying only, but as a profit centre that contributes to the bottom line.
With the blurring of distinction between pure, speculative and financial risks, the risk management discipline is evolving and expanding, becoming more strategic and multi-disciplinary in its approach. This provides the risk manager with wider opportunities to practice his craft. It will involve a lot of vision and creativity on his or her part, as well as a moderate amount of profile raising so that what is done or what is achieved reaches the eyes and ears of management.
In this era of globalisation and liberalisation, there are a lot of things the risk manager can do to transform himself into an active member of management and, with this added-value, increase his role and maybe his indispensability to the corporation.
The Asian economic crisis will pass, hopefully, sooner rather than later, and the risk manager will survive, chastened perhaps but richer in experiences.
The second biennial conference of the Federation of Asian, Pacific and African Risk Management Organizations (FAPARMO), being held in Manila on 14-16 October, takes up these issues with the theme: Promoting risk management for national and corporate goals: the way to cut cost, boost growth and enhance profitability. Conference sponsors are the Risk and Insurance Management Association of the Philippines (RIMAP) and Asia Insurance Review.
FAPARMO came into being in 1995 to bring a regional focus to the avoidance of loss through the application of good risk management techniques. The federation has a primary objective of promoting regional co-operation in risk management and, in the process, enhancing the position of risk managers in the region, as well as increasing general awareness of the issues involved in risk management. With representatives from Australia, India, Japan, Malaysia, the Philippines, Singapore, South Africa and Taiwan, FAPARMO pools a wealth of experience in the complex area of risk management.
The three day conference features six plenary topics and 28 concurrent sessions broken down into general/technical and specialised topics. Speakers are drawn from the United States, including the president of RIMS, Mark Delillo, the United Kingdom, Australia, Singapore and the Philippines.
This event aims to address the very topical issues of how to maintain your market share and profitability in trying times and come out ahead. In addition, it poses an excellent opportunity for risk managers to network and improve their professional recognition in the region.
Levi R. Rebanal is president of FAPARMO and chairman of RIMAP. He is a lawyer and risk and insurance practitioner by training and profession. Having started his career with AIG Company in the Philippines. Mr Rebanal was for 15 years vice president for risk and insurance management of Philippine Airlines.Tel: 832 812 0328. Fax: 832 840 2172.