Sight unseen:
navigating out-of-sight risks in Asia-Pacific
Unexpected risks are hitting APAC businesses hard—nearly half of surveyed
leaders admit they were unprepared for major disruptions. This report uncovers
the most overlooked threats and offers practical strategies to strengthen risk
management and build resilience. Discover what you can do differently.
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Executive summary
Business leaders do not like surprises. They want to have maximum visibility of the
existing and potential threats to
their business, a clear view of the damage they could cause, and to ensure that
mitigation measures are in place should
the risks materialise. Meeting these requirements has grown increasingly complex as
geopolitical uncertainty,
technological development, climate change and other factors give rise to a widening
array of threats.
Not enough businesses are keeping up with the change in risk landscapes in
Asia-Pacific (APAC). In a survey we conducted of C-level executives in the region,
around half say that most of the risks that have impacted their organisations have
not been high on their radar, and that the tolls have been substantial. The
disruptions caused by factory fires in Bangladesh or the 2023 Typhoon Doksuri in
China, are just some examples of risks that go unnoticed, despite their potential to
cause significant disruption. We call these "out of sight"
risks. They fall under the corporate radar, either because they are accorded
lower priority than they should be or are not considered to be detrimental
despite their potential to cause significant disruption. Our analysis
of survey results and insights gathered from business leaders in the region reveal
several weaknesses in corporate risk management that are likely to have contributed
to such oversights.
Key findings
Out of sight risks cause
considerable pain.
Most businesses rightly assign high priority to risks they consider having high
impact. However, several other risks get misjudged. Such out of sight risks have
taken a toll on almost half of respondents’ organisations. Almost three-quarters say
that their revenue, profitability and financial stability have taken a major hit
from unexpected events, and 63% say such events have seriously impacted their supply
chains and logistics.
Businesses misjudge the likelihood
or gravity of certain risks.
Most businesses deem legal, regulatory and social risks low priority; however, they
can have dire consequences. Also, some organisations may even insufficiently
prioritise preventative action for major risks such as climate change. Reasons
include personal bias, low risk maturity and fragmented risk management.
Many businesses are unambitious
about improving risk management.
Traditional risk monitoring tools, such as horizon scanning and scenario planning,
are in wide use, but only about half of businesses are applying advanced analytical
tools and even less are employing preventative solutions (36%), such as
science-based and engineering measures. The majority are considering the latter but
have no plans to implement them (52%).
Data weaknesses, lack of safety
nets and inadequate communication hamper risk management.
Insufficient or poor quality data tops (52%) the list of key risk management
challenges. However, experts believe that risk managers’ inability to use data
effectively is a bigger problem. Basing risk assessments on objective data can
mitigate
personal biases. For 45% of respondents, a lack of safety nets—such as having
alternative suppliers, emergency funds, insurance or early-warning systems—is a key
concern. Around one-third also cite inadequate communication on a company’s
risk culture.
Key action steps
Our analysis holds five lessons for
businesses in APAC as they seek to improve risk identification, prioritisation
and management:
Review and revisit risks
proactively.
A strong risk culture encourages the constant questioning of established
assumptions. It also helps prevent personal bias from exerting undue influence on
risk prioritisation. Businesses can maintain focus on relevant risks by leveraging
objective data.
Educate to engage.
Securing C-suite buy-in for risk management requires skilling and knowledge transfer
to equip them for long-term risk mitigation and drive proactive action.
Connect the dots.
Siloed risk management is a hallmark of weak risk culture. Risk managers—with strong
support from senior leadership—must demonstrate the virtues of collaborative risk
management to other business functions. To advance collaboration, risk management
staff must also communicate in a way that other functions can
easily understand.
Invest in data insight.
Risk management teams must develop skills to better analyse data and put insights to
actionable use. They should speed the adoption of advanced data analytics tools.
Rigorous governance frameworks must also be in place to leverage these
tools effectively.
Use prevention to augment
mitigation.
Cybersecurity and climate change are examples where preventative measures can do
much to protect against risks before
they materialise and cause serious damage.
Continue reading the report by downloading the full PDF below:
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INFOGRAPHIC
Unpacking the gaps in risk management
From climate shocks to trade restrictions, businesses are misprioritising key risks
and paying the
price. Our infographic highlights critical blind spots and offers actionable
insights to help navigate
out-of-sight risks.
Sight unseen:
managing out-of-sight risks in Australia
Australian businesses are facing data security breaches, extreme weather events
and trade risks—all while 64% say poor-quality data is their biggest challenge
in risk management. Without data-driven insights, can they truly prepare for the
next crisis?
Sight unseen:
managing out-of-sight risks in South Korea
South Korea's export-driven economy is vulnerable to geopolitical changes—yet
many businesses lack
strong risk management structures to prepare for disruptions. Only 9% have firm
plans to implement
preventative risk measures, leaving them at risk of cascading failures.
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PROFILE
From engineering frontlines to
company leader
From chemical engineer to FM leader, James Thompson has
worked in 28
countries, blending technical expertise with leadership to reduce risks and
enhance client
relationships.
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PODCAST
Confronting the elephant in the room:
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climate risks
Rooted in a rich history, FM sets its eyes on
the future
Nearly 200 years ago, Zachariah Allen pioneered a revolutionary
approach to risk
and loss prevention. His belief in innovation and cooperation still guides FM’s
strategy today.
Discover
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ARTICLE
Will climate risk shape Australia’s
economic future?
Data-driven insurance has become an increasingly important piece
of the puzzle
in
helping Australian businesses protect against multiple risks. This includes the
pressing issue facing
the country—the intensifying climate crisis.
Explore innovative risk management solutions and discover how FM helps businesses
enhance resilience.
Visit our website for expert resources and insights.
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