With the COVID pandemic and geo-political tensions continuing to influence the global economy, the need for businesses to have effective risk management programs in place has become increasingly evident. Seeking to ensure the long-term viability of its operations, the Gokongwei Group held its first Chief Risk Officer Conference on June 27, 2022.
Organized and led by JG Summit’s Chief Financial and Risk Officer, Brian M. Go, the conference was attended by various chief risk officers, finance and audit executives from the Gokongwei Group, which is composed of JG Summit Holdings, Robinsons Retail, and Summit Media, and their respective business units and affiliates including UNICON Insurance Brokers Corporation and Data Analytics Ventures, Inc. (DAVI), among others.
Together, the group engaged in productive discussions on the relevance of enterprise risk management (ERM), risk identification and mitigation, and turning risks into opportunities and a means toward becoming resilient.
In the event’s opening remarks, Go stressed the importance of implementing ERM strategically within the Gokongwei Group. “As we work our way through the new normal, there is a need to completely reassess the traditional way we look and respond at risks and be prepared for new ones we are yet to face. Hence, the role that we play in identifying these risks and putting up mitigating measures is more vital than ever. With the drastically changing landscape, our roles as modern CROs must constantly evolve to become enablers and strategic partners for our organization’s growth and sustainability,” said Go.
Driving home this point, JG Summit President and CEO Lance Y. Gokongwei delivered a similar message to attendees. “While no organization or risk management system can accurately predict the next big disruptive event, having a consistent and proactive approach in identifying risk areas in all our business processes – and setting up guard rails against these events – will help us achieve our objectives,” said Gokongwei. With the establishment of the conglomerate’s Board Risk Oversight Committee (BROC) and the appointment of CROs in key companies within the group, one of Gokongwei’s goals as CEO, which is to strengthen the group’s governance, risk, and compliance initiatives, has come closer to being realized.
To guide the Gokongwei Group on its ERM journey, the conference invited industry experts to shed more light on the topic of risk management.
Derek Taylor, Head of Strategic Risk Consulting of the Singapore-based consultancy firm Marsh Advisory, Asia, led an engaging talk that focused on the relevance of ERM, the rapidly shifting risk landscape, and ERM for a post-pandemic world, Taylor pointed out that with regards to risk management, a company’s past performance, no matter how successful, “doesn’t tell you everything you need to know going forward.” One must not only rely on historical precedent “to inform your future view of risk in identifying it, monitoring it, and controlling it” – and this is one of the main reasons why Taylor believes ERM is more important than ever.
Taylor also reminded the audience to be aware of blind spots and biases when assessing a company’s risks, such as the recency bias, which he defines as the “recently felt or experienced risk that takes up all your time or focus.” To illustrate, he presented the results from surveys conducted in 2020 and 2021, which showed that many companies did not consider geopolitical risk as relevant to their businesses. This year, however, geopolitical risk is now number 2 on what companies are most concerned about, as the conflict between Russia and Ukraine as well as tensions in the South China Sea have led to price instability, inflation, commodity shocks, supply chain issues, and resource geo-politicization. In summary, Taylor advises CROs to carefully consider risks that currently rank as “low impact” or “low likelihood” as these could escalate into problem areas quickly.
Another speaker, Ma. Victoria “Vickie” Tan, head of the Enterprise Risk Management and Sustainability unit of Ayala Corporation, shared insights on establishing a robust risk management program. She underscored the need to have a clear vision for a company’s ERM program and an understanding of how it will bring value to the organization beyond mere compliance.
Following these talks, the Gokongwei Group’s CROs shared the best practices employed in their business units, the challenges and learnings from implementing their ERM programs, and roadmaps for improvement in the future. These discussions were led by Atty. Dinnie Tieng and Trisha Marie Gutierrez, ERM heads of Cebu Pacific and Robinsons Bank, respectively, two companies with more established ERM programs within the Gokongwei Group.
