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The world is different than it was two years ago and so is the risk environment in which organisations operate. Change is fast and disruptive.
As the world gradually returns to some semblance of normalcy, organisations in Singapore are opening up to a new normal that is filled with new risks beyond the pandemic. Externally, geopolitical conflict has left a lasting disruptive impact on business and supply chain operations. Internally within organisations, Singapore corporate leaders face a changing workforce, new regulations, cybersecurity threats, and also the pressure to keep pace with digitalisation.
At the same time, risk management is a growing concern. In a business environment defined by volatility and laden with interconnected risks, risk management must be a team sport, with the right structures and tools in order to support business agility.
Five key areas of focus for risk management in Singapore
The findings from PwC’s 2022 Global Risk Survey unveiled five key areas that business executives should focus on as they strive to manage risks and take advantage of opportunities as an organisation:
1. Engage early and get risk insights at the point of decision
Embracing risk management is a tall order. Risk environments evolve faster than the business can readily adapt. Despite the challenges, encouraging better risk management practices remains a worthwhile endeavour. Organisations that embrace risk management almost twice as likely to project revenue growth of 11% or more over the next 12 months. Early engagement in risk matters should provide business leaders with a good understanding of the boundaries in which they can play in, upon which excellent customer experiences, and other creative means of maximising opportunities, can be designed.
2. Take a panoramic view of risk
Data is central to the construction of dependable key risk indicators (KRIs), and like any data analytics workstream, it would require adequate consideration of process automation and insight visualisation so that a user can truly acquire a panoramic view of all associated risks. 66% of the respondents in Singapore indicated that they are already reaping the benefits of or have implemented at scale a panoramic and integrated governance, risk and controls system. However, 19% of Singapore respondents have yet to act on this.
3. Set and employ risk appetite to take advantage of the upside of risk
An organisation’s risk management capabilities can create tremendous value if they help the organisation take advantage of the upside of risks that have higher payoff. Risk appetite is about culture, as much as it is about criteria. Beyond codified rules and quantified metrics, another important aspect of risk management involves cultivating a suitable organisational risk appetite and culture that is driven by principles that help business leaders make good judgement.
4. Enable risk-based decision-making through systems and processes
As risks become more complex and intertwined, business leaders should focus on investing in systems and processes that enhance risk management capabilities across the organisation. In particular, driving the adoption of integrated risk monitoring technology platforms enables comprehensive real-time monitoring and consistent reporting, which increases risk management effectiveness. 63% of Singapore respondents are already investing in risk management technology as part of an integrated technology stack.
5. Double down efforts on top risks
Risks are usually closely interconnected, with the potential to amplify the effect of one another. Not all risks can be avoided or minimised, but being proactive about risk management plans will help the firm develop resilience and enable organisations to respond to risks and market threats confidently. Singapore firms have been able to take a more proactive approach than their global counterparts in areas like digital transformation and continuous dialogue with policymakers, due to a facilitative business environment.
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Greg Unsworth
Digital and Data Services, Risk Services Leader, PwC Singapore
Tel: +65 9848 6025
David Toh
Governance, Risk, Controls and Internal Audit Leader, PwC Singapore
Tel: +65 9186 3006
Sustainability and Climate Change Practice Leader, Partner, PwC Singapore
Tel: +65 9817 8213