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Friday, September 08, 2017, 20:07
Asia-Pacific firms put risk-management at front line
By Luo Weiteng
Friday, September 08, 2017, 20:07 By Luo Weiteng

Companies in Asia-Pacific region are giving front-line business units greater decision-making power to manage risk, rather than primarily relying on specialist back-office functions as before, a study from the global accounting firm PricewaterhouseCoopers says. 

“Business risk proves to be a growing issue for front-line units, not just dedicated compliance teams,” said Jim Woods, global risk assurance leader for PwC. “Companies that can make good use of the front-line defense tend to have a much stronger risk culture and are more confident about their future financial performance. The aim is not to avoid risk, but to manage it.”

The study surveyed 1,581 company executives across 30 industries including 241 from the Asia-Pacific region and found some 56 percent of Asia-Pacific firms plan to shift risk-management back to their front-line units over the coming three years, compared with 46 percent globally.

“Keeping risks at manageable levels has never been a bigger issue than today, when a fast-changing business environment with intensified regulatory pressures makes risk-management and compliance teams bear an increasing burden,” said Cimi Leung, Hong Kong-based risk assurance markets leader for PwC.

“New technology and approaches, such as data analytics tools, could better equip front-line business units, particularly for larger firms, with robust business insights to make risk-informed decisions.”

Developing markets such as the Chinese mainland, which have long lagged behind mature markets, tend to become the most active adopters of new technology for risk management.

“There is essentially a ‘leapfrog effect’. Just like how the Chinese mainland is jumping directly from cash and credit cards to e-payments, the country is also leapfrogging from a used-to-be lack of risk-management expertise to the most cutting-edge technology,” said Woods.

“Different companies have their own way of risk management. But strong risk-management functions are just like good mechanics to help our racing car go faster and win the race. And the best-performing companies have such an attitude towards risk management. They are very much focused on competitive advantage, helping companies better identify risk and therefore better manage risk,” he added.


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