The intersection between economic actors and politics has never been more pertinent than it is today. Owing to the effects of globalisation, most of the risks and opportunities facing Australian organisations are found beyond our borders. No longer can executives be concerned with a narrow conception of risk; rather, they need to consider events abroad and factor these into their considerations.
Opportunity. Growth. Partnership.
These are the terms that come to mind when I consider Australia’s regional economic partners. China, Indonesia and India all have massive, growing populations and a desire to import from Australia. For organisations, the opportunities are endless. The future appears bountiful and ripe for the plucking.
We are right to feel excited about this. Australian executives are fortunate to be in a position where the work is there for the taking. It’s vital that we squeeze as much juice out of this as we can because at a macro and micro level, we will all benefit.
But for every opportunity, there is a risk.
Executives are used to dealing with risk. We all have plans and strategies in place to avoid contingencies that we can foresee. But the risks I am talking about here are different to most risks that executives typically deal with.
Political upheaval. Terrorism. Cyberattacks. Social distress. All of these forces will be rife in the future – especially in our region, where developing nations are growing into their full form. We are grappling with new technologies that we will only truly understand long after we start using them. What this means for executives is that
their risk management strategies will be more complex, nuanced and broad than ever before.
The World Economic Forum’s 2019 Regional Risks For Doing Business Report sheds light on this notion. Not only does it identify the top 5 local level risks facing Australia – energy prices, cyberattacks, asset bubble, failure of critical infrastructure and fiscal crisis – but it goes into depth about some of the regional risks Australia might be facing in Asia and the Pacific.
- Environmental Risks
Extreme weather events and natural catastrophes are all common and devasting risks in Japan, New Zealand, Indonesia and the Philippines. Think back to the earthquake and tsunami that hit Indonesia in 2018. Even now, Japan is in the midst of a destructive cyclone rolling through its countryside. As per the World Economic Forum Report, the Asia Pacific Region experienced 50% of the world’s total natural disasters in 2018. Costs were totalled at $56.8 billion.
Many of our Asia-Pacific partners are developing countries. As such, some of them lack the digital infrastructure to cope with the potential for technological warfare. Even Singapore, one of the more secure countries in the region, has experienced the consequences of hacking and cyberattacks. In 2018, its largest health group was attacked with 1.5 million people’s data leaked. If your partners are susceptible to hacking, then your data is vulnerable.
- Interstate conflict
Tensions in the region are at an all time high. India and Pakistan. The South China Sea. Hong Kong. North Korea. As these diplomatic crises play out, negotiating economic relations are volatile. The understanding we have at the beginning of a meeting can be flipped completely by the end if a war breaks out or a government policy changes. All it takes is one missile or assassination and the best laid plans of executives and managers can go array.
The Take Away
What these examples and statistics illustrate is that executives are contending with forces they would not expect to contend with. Like it or not, it’s what comes with the territory of globalisation. You can’t have the opportunity without the risk. The reason that Asia is such a goldmine is because it is growing and changing – with that growth comes the potential for crisis.
As such, executives must open their eyes to issues they might not normally consider when at work. It means watching the SBS World News every night to work out the impact of a change of government in Indonesia. It means Googling India and Pakistan’s nuclear capacities to work out the stability of certain regions.
Executives can no longer be pure executives when it comes to managing risk. They must be geopolitical, economic and social experts.