Page 13 - AEC Digital Edition

medical inflation we have seen in the region, upgrading improve employee engagement and put in place succession
the health systems in the AEC and aligning the cost and plans, among others.
quality of care among member states will be critical but
will not be easy. Putting pressure on the cost inflation will How then can businesses better manage risks in a
be increased utilisation and access in the more medically- more integrated economic block?
advanced countries.
While many large multinationals from countries such
Although individual states are expected to maintain as Singapore and Malaysia already operate a pan-ASEAN
and enforce their own legislative agenda, over time, you footprint, many small, medium or even large enterprises
may expect stricter laws on labour, competition, taxation, may be stepping out of their domestic market for the first
environment and occupational safety to better conform time. Setting up operations abroad, raising capital on a
to the standards of developed economies. Whilst this foreign stock exchange, or increasing ties with foreign
development is generally a good thing for consumers and suppliers, all bring potential pitfalls. Most of these risks
the overall ecosystem, it can bring additional costs and are fairly well-understood and well-traversed by existing
consequences if breaches occur. multi-nationals.

However, this provides companies that have strong For manufacturing or trading companies, it is important
customer and employee value proposition, as well as a to understand the risk products available to protect against
nimble compliance framework, to potentially expand counter-party risks, but also to fulfill the counterparty
overseas. requirements of foreign buyers/suppliers.

What are the major vulnerabilities associated For companies that have operational assets in foreign
with border opening and should be more studied? countries (both service and manufacturing companies),
Strategically, large existing understanding local natural disaster risk will be crucial
(eg, earthquake) to assess risk
multi-nationals benefit from management requirements
the markets opening, as
they can leverage the tools, ‘Companies that already face for these assets. In addition,
experience and talent base local liability coverage can
to quickly expand their be substantially different
strong competition in their depending on local legislative

operations into new markets. domestic market need to brace environment from the home
Particularly stressed will be
local monopolies that have for impact on capital, talent and country. As mentioned above,
ensuring organisational
traditionally enjoyed market technology access with an influx resilience and appropriate
and customer access as a result of foreign competition.’ business continuity plans are
of protectionism. in place particularly in the new
markets will be crucial for a
Along with strategic successful entry.
opportunities, border opening
also brings political/terrorism For publicly listed entities,
whether in their domestic
risks, crime risks (eg, Cyber),
and credit risks (of foreign counter parties), risks from a market or seeking to list in other markets (eg, Philippine
more complex supply chain, as well as potentially stricter companies wishing to list in Singapore), a change in listing
corporate governance requirements. Dealing with these will require revisiting their Directors and Officer’s coverage,
risks will be a part of doing business within a larger potentially raising limits of liability.
community of stakeholders. Companies have to review their Newly minted multi-national companies will find that
overall enterprise risk exposure, given their strategies and they will be able to achieve economies of scale by arranging
potential suppliers and trading partners, and discuss with package policies with a single insurer covering multiple
their advisors on which risks need to be isolated and dealt countries. Significant cost savings can be attained in this
with and which can be mitigated and then absorbed (not all way but caveat emptor applies and buyers must pay careful
risks can be insured away). Concurrently, companies should attention to legal and compliance issues that may arise
also review their resilience strategies, ensuring potential from non-admitted insurance. Post-integration, ASEAN
scenarios associated with the AEC are considered and their remains a highly insurance-regulated region, and regional
responses planned and considered. programs are only possible with global insurers that have
On the talent front, domestic firms in the emerging licensed entities in each country and are thus able to issue
economies may be more vulnerable to poaching and rising documentation locally.
attrition as the protectionism they enjoyed extended to To take better care of employees, companies should
retention of employees through job security and other better understand their people risks and then prioritise
benefits. As economies open and the businesses face stiffer these risks and the investments needed to mitigate them.
competition, employees not only are expected to raise their They may also consider adopting a pan-regional employee
productivity but also have access to other employers with benefit programme that combines consolidation and local
alternative (better) working environments or benefits. admitted risk profiles for cost sustainability. Similar to P&C
Thus, in addition to considering the embedded risks in their insurance partners, service providers chosen should have a
business models, these businesses need to re-examine and similar regional footprint as the businesses, as they will be
potentially re-align remuneration and benefit packages, able to provide the employee engagement and experience

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