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Singapore conference: the global fit.

The countries of East Asia represent the fastest growing economies in the world today. Hong Kong, Singapore, Taiwan and South Korea are now referred to as the four tigers of East Asia because of their ever-expanding push in the global trade arena. Consequently, companies are engaging in new business ventures and overseas projects in that region at an accelerated pace, creating challenges for risk managers who must direct the exposures and liabilities of progress and rapidly expanding economies.

Attending the third Asia-Pacific Risk Management Conference and Trade Exhibition on Oct. 4-7 in Singapore, co-sponsored by RIMS and the Risk and Insurance Management Association of Singapore (RIMAS), were more than 170 risk managers, brokers and insurers gathered to discuss the state of risk management in the region. In her opening address, Suzanne Crager, president of RIMS and assistant vice president of PNC Financial Corp. in Pittsburgh, said that the emergence of the Asia-Pacific region as a major force in global commerce has been one of the most dramatic success stories in recent history, citing a World Bank statistic that projects the Asian-Pacific gross national product will match that of the United States and Europe by the year 2000.

What does this mean for the risk management discipline in the Asia-Pacific region? Or for that matter, elsewhere in the world? "The development of risk management here in Asia is an evolution that I believe will take place at varying speeds in each individual country and market since each has its own unique differences," Ms. Crager said. "Risk management is evolving and expanding. It evolves in response to increased exposure to risk and the cost of financing risk."

"Are risk managers in the region gearing themselves towards a global fit?" questioned Jeanne Tan, risk manager of Jack Chia of the MPH Group of Companies in Singapore and co-chair of the conference organizing committee. "The trend seems to point towards an expansion of the risk manager's role to include new skills not usually covered in traditional risk management practices," Ms. Tan said, as more and more enterprises evolve from a single business, single market to multi-businesses, with several products and markets.

New demands to cope with economic growth will pose new and formidable challenges to the East Asian risk manager whose management function will be complex - and will necessarily include knowledge of other management disciplines that contribute towards the practice of holistic risk management, Ms. Tan explained. Risk managers working in this region will encounter a kaleidoscope of business environment details. Comparing the principles of total quality control (TQC) to a loss control mechanism of risk management, she said that adopting these managerial philosophies had helped to boost East Asia's push in the global marketplace.

Ms. Crager spoke of the increasingly important role of associations and international liaisons if risk management is to thrive in the global economy. "There's no doubt that strong local and national associations are the key to achieving the best interests of the discipline," said Ms. Crager. RIMS' co-sponsorship of this conference was an outgrowth of our desire to further interest in the discipline worldwide. Today, in addition to that continuing aspiration, our involvement reflects the dramatically increasing global interests of our member companies in the United States and Canada."

The current dynamics of world commerce, she added, have risk managers from Western nations in pursuit of insights and an understanding of risk situations in the Asia-Pacific, while their counterparts in the Asia-Pacific are in pursuit of insights and understanding of advanced risk management practices from Western cultures. "In effect," she concluded, "we are all moving toward a global fit, based on increasing interdependencies among all producing and consuming nations of the world."

As a representative from Europe, Francois Settembrino, director of Tabacofina/Vander Elst, S.A. in Edegem, Belgium, and president of the European Risk Management Association, also spoke at the conference's opening session. Mr. Settembrino attributed the rise of risk management to the notion that vulnerability and uncertainty are key characteristics of a service economy. "Everything changes in an uncontrolled way, and vulnerability increases in an exponential way," he said. Is it possible to subject all factors to prediction? It is an impossible demand so the need for risk management is becoming ever bigger, as is the need for education.

Most speakers agreed that education will play an integral role in the coming changes. William Goh, director of the Singapore Insurance Institute, said that the Nanyang Technological University (NTU) in Singapore has created a business degree in insurance with risk management included in the program. The newest polytechnic in Singapore, the Nanyang Polytechnic, has recently introduced a diploma in risk management and insurance. Other educational developments in the region include a graduate diploma in risk management offered by the Macquarie University in Sydney, Australia. In addition, with the efforts of the University of Malaysia and the' Malaysian Insurance Institute, advancements in risk management education are being made in that region. Most recently, Malaysia has formed its own risk management association the Malaysian Association of Risk and Insurance Managers (MARlM).


In light of Asia's tremendous economic growth, what will the effect be on Singapore's insurance sector? Ms. Lim Shu Chiau, director of the Insurance Commissioner's Department of the Monetary Authority of Singapore, spoke about Singapore's status as a global insurance center because it is a popular captive domicile in the region. "Singapore's benefit as a captive base for the Asia-Pacific region is that it is politically and economically stable with a well-established business infrastructure," she said.

Certainly, new types of risks to this region will emerge, said Alan Baxter of Alexander Howden, Far East Pte Ltd., and insurers will indemnify an increasingly broader spectrum of exposures due to high technology with greater liabilities. While regional markets, he said, will be compelled to maintain local support facilities, corporate buyers will be seeking a full assessment of their risk transfer requirements. Can local insurance markets offer adequate solutions? Because of the nature of limited global capacity, covers for oil, gas and environmental liability are handled by highly specialized "offshore" markets. Mr. Baxter said that there is no doubt that regional markets should participate in the underwriting of these risks because they form the nucleus of domestic premium growth. "The importance of the insurance sector is one of growing emergence and prominence as an integral part of the invisible trade balance in every country within the Asia-Pacific region," Mr. Baxter said.

Another important player in the Asia-Pacific insurance scene is Australia, according to Terry Paradine, chairman and chief executive of Marsh & McLennan Pty Ltd. in Sydney, Australia, where the consumer movement has put green issues on the agenda. "There is wide interest in how industry and manufacturers handle their operations in terms of the environment," he said. In fact, recently, Australia enacted an Environmental Offences and Penalties Act whereby polluters can be fined up to $1 million and face jail sentences.

"Today's wrongdoers are pursued vigorously," he added. In Australia, there are now statutes governing asbestos removal, buried wastes and storage tanks; businesses must comply with an increasing number of rules from a clean air act, clean waters act, dangerous goods act, environmentally hazardous chemicals act and a waste disposal act.
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Title Annotation:Third Asia-Pacific Risk Management Conference
Author:Oshins, Alice H.
Publication:Risk Management
Date:Dec 1, 1992
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