Australian businesses continue to lean on reactive risk management approaches to business-critical events as they respond to the current economic and social impacts of the COVID-19 pandemic and plan for future climate change-induced natural disasters.
According to Helen Sutton, SVP EMEA + APAC Sales at Dataminr , “During a time where Australian businesses are scrambling to find new markets as a result of geopolitical trade unstability, savvy business decision-makers need to also invest in preparing and solving for climate change-induced enterprise risks that are certain to become crises. In fact, a new study from Swiss Re estimated that Australia’s economy could potentially take a 12.5 per cent hit by 2050 if the globe warms by 2.6C. That’s a 29-year lead.”
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She told Which-50, while many have gotten by with outdated approaches, they are putting their businesses bottom lines at risk and creating a market vulnerability from an operational, reputational, and business standpoint.
Sutton said leaders looking to go beyond just business continuity, and drive market innovation must prioritise the development of tech-enabled, flexible risk management frameworks.
“Historically, the practice of risk management was often undertaken as a series of ‘box-ticking’ protocols, rather than a collaborative, prioritised framework deserving of space on boardroom agendas.”
However, events such as the Australia Nine Network cyber attack, or significant hits to business activity due to the pandemic over the last 18 months have presented an opportunity, she said. Leaders of risk functions need to optimise its operations by de-siloing risk response efforts, and accelerating the adoption of advanced technologies. It’s time for business leaders and frontline function owners to collectively embrace this paradigm shift instead of burying their heads in the sand, says Sutton.
A study by Deloitte found that almost 30 per cent of executives say their organisations have felt the operational impacts of climate-related disasters.
“But how are enterprise leaders addressing this risk set? With 42 per cent of businesses still improvising when it comes to their risk management function, it appears that many are not. It’s more clear than ever that business leaders should not think of crisis preparedness as a nice-to-have, but rather a core part of their business continuity and innovation planning.”
Sutton argues that the ad hoc crisis response has had catastrophic effects on APAC businesses’ people, operations, reputation and bottom lines – and says in some cases the damage may be irreversible.
From operational disruptions to securing local and global supply chains, Sutton says leaders need to take data-led approaches and invest in advanced technologies – such as real-time information platforms – so that they can know of emerging risks first, and make informed decisions quickly.
“Australia’s economic volatility reinforced the importance of enterprises having a long-term technology strategy to avert or have flexible responses to issues such as climate change-induced operational pivots and supply chain shortages or cyber and digital attacks. More than ever, leaders must connect the dots among the growing enterprise risks, vulnerabilities and gaps they’ve unearthed during this turbulent period and align their business-critical goals with new technologies that help them solve real problems.”