Risk management professionals from the Aboitiz Group were invited to provide key insights on the evolving global risk landscape at the recent Pan-Asia Risk & Insurance Management Association (PARIMA) Manila Conference 2024. Speaking at panel discussions around the conference theme of “Global Risks, Asia’s Response,” the Aboitiz risk team gave PARIMA members a clear picture of the Group’s well-established understanding of how enterprise-wide risk exposures can be turned into opportunities that enable long-term success.

Kicking off the two-day gathering, Aboitiz Food Group’s Chief Risk Officer Annacel Natividad addressed the organization for the first time as PARIMA Chairperson and shared her vision of risk roles going beyond compliance duties within organizations.

“In our increasingly complex world, interconnected challenges demand proactive solutions. Anticipating, mitigating, and managing risks is no longer optional; it is essential. By harnessing our collective expertise, experience, and determination, we can transform uncertainties into opportunities, fostering growth and resilience,” Annacel further explained, underscoring how risk management thinking needs to be embedded from crafting strategies to operational aspects of company strategy.

Annacel also highlighted the conference theme that underscored Asia’s stance in addressing global risks through strategic foresight and regional solidarity. Asian nations are leading the charge across different areas, from mitigating geopolitical tensions to bolstering economic resilience by diversifying supply chains. At the same time, the region is prioritizing environmental sustainability with ambitious climate goals and innovative technologies for a sustainable future.

PARIMA fosters a commitment to proactive risk management that involves innovative strategies essential in today's complex global landscape. As an industry organization, its mission is to engage, educate, and elevate the risk profession for its 2,800 members across 23 countries in the Asia-Pacific region. It serves as a vital platform for risk professionals to strengthen and enhance the overall culture of risk management, create opportunities for education and dialogue, and spread best practices and knowledge in the field.

Embedding Risk Into the Corporate DNA

In a panel discussion on "Leadership Transitions: Empowering Tomorrow’s Leaders," Jaime Moraza, Food Group Head of Strategy, shared a radical approach to dissolving traditional risk management departments in favor of embedding risk awareness into the corporate culture.

“I’d get rid of the risk management department,” he responded when asked what legacy he wanted to imprint on the organization. “I see a future where we no longer have a standalone risk management department; it's just everyone's job to be risk managers. [Risk] is basically embedded in the culture and in the operations... It becomes more natural.”

He cited the Food Group’s innovative approaches to addressing risks, sustainability, and volatility in the industry, such as transitioning to biofuels by replacing conventional fuel sources with rice husk and locally sourcing ingredients to mitigate supply chain risks. Such measures not only promote environmental sustainability but also reduce vulnerability to global commodity price volatility.

Navigating Geopolitical Turbulence

Ed Monares, AVP for Risk Management of the Food Group, brought a strategic lens to the panel on "Staying Informed, Nimble and Resilient Amidst Geopolitical Risks." He underscored the importance of having a comprehensive understanding of the risk and involving internal and external experts to craft a holistic view of the potential impact to the business.

"We try to look at it from the perspective of strategic risks, operational and emerging risks. We involve our internal and external subject matter experts to paint a picture in terms of the potential impact of geopolitical risks on our organization," Ed explained.

This session is particularly relevant as the Group views geopolitical unrest as an emerging risk with multi-faceted downstream impacts, such as supply chain disruptions, increased fuel and commodity prices, logistics costs, and interest rates. Thus, if these critical events continue, they can potentially affect the strategic goals and objectives of the organization and impact the overall performance of its portfolio.

Ed highlighted the necessity of integrating geopolitical risk management into the broader risk management framework, engaging key stakeholders, and developing actionable plans to safeguard the supply chain and maintain operational continuity amidst geopolitical uncertainties.

Shielding Against Natural Catastrophes

Raul Imperial, Head of Risk Finance for Aboitiz Equity Ventures (AEV), shared his expertise in managing natural disaster risks during the panel "Navigating the Storm: Parametric Insurance as a Shield Against Natural Catastrophes." He cited the unique challenges faced by the power distribution sector, where the immediate repair of infrastructure is crucial in the face of a natural disaster.

"We have a franchise area with poles and wires that need to be continuously online otherwise a lot of houses will be in the dark. Once these are damaged, we need to ensure that it is quickly repaired," he explained.

He further outlined the limitations of traditional insurance in addressing these risks and advocated for parametric insurance programs, not to replace but to complement traditional insurance programs. These programs, he noted, provide timely insurance claims settlement to support repairs of damaged properties, ensuring operational resilience even in the face of natural catastrophes.

Furthermore, extreme weather events and natural catastrophes, driven by climate change, are a major global concern and are expected to escalate in the coming years. This underscores the need for robust risk management strategies.

Aboitiz regularly reviews and updates its mitigation plans as the climate change crisis unfolds. Its risk treatment focuses on both climate transition and adaptation. Business Continuity Plans (BCPs) are updated annually to align with evolving assumptions about extreme weather events, ensuring they operate effectively.

Moreover, Raul highlighted the importance of a rigorous risk identification process and mitigating risks, including collaboration with stakeholders and experts, to ensure robust risk management frameworks tailored to specific operational needs. By combining parametric insurance with comprehensive BCPs and adaptive risk strategies, Aboitiz is committed to maintaining operational resilience and safeguarding its businesses and communities in the face of natural disasters.

A Glimpse into the Future of Risk Management

Tin Kempeneers, Head of Risk Management for AEV, educated the audience with her vision of what the practice may look like during the panel, "A Peek into the Future of Risk Management." She described a proactive, data-driven future where artificial intelligence plays a crucial role in identifying trends, simulating threats, and generating insightful reports.

"Gone are the days of knee-jerk reactions. We now want to be more proactive, we want to take the first step to prevent threats from happening," Tin said.

She stressed the symbiotic relationship between human intuition and AI, cautioning against overreliance on technology due to potential biases and the need for human oversight in decision-making. Kempeneers’ balanced perspective highlighted how AI can enhance, but not replace, the critical thinking and strategic insight of risk professionals.

"It’s about taking the first step to prevent threats from materializing. With AI, we can perform big data analysis to identify trends and risks, use it as an early warning system, and even simulate threats to better prepare for them. However, it's crucial to maintain human oversight to ensure the quality and relevance of AI-driven insights," she concluded.

Fostering a Culture of Risk and Resilience

PARIMA Manila closed by awarding Risk Management Society (RIMS) - Certified Risk Management Professional (RIMS-CRMP) certifications to notable member practitioners. This certification is a result of the close collaboration between RIMS and PARIMA to elevate the standard for risk management around the world.

AEV Risk Management’s Tin Kempeneers, Joyce Galura, Jaya Viado, and Pilmico Vietnam’s My Nguyen were awarded this certification, with the trio from AEV marking the first such batch in the Philippines. This achievement underscores a significant milestone for the Aboitiz Group and demonstrates our exceptional knowledge and competencies in successfully managing risk and creating value for the organization.

Moreover, the Group’s highly enriching engagement at the PARIMA Manila Conference 2024 showcased its expertise and innovative approaches to risk management. Aligned with the Great Transformation, the organization’s risk management approach leverages deep industry understanding and global insights, addressing interconnected challenges such as climate change, cybersecurity threats, and geopolitical tensions. By embedding a risk mindset into every role, the Group envisions a future where everyone is a risk manager.

This holistic approach, coupled with a strong community of practice and a dedication to continuous improvement, highlights the Risk Management team’s commitment to transforming uncertainties into opportunities. These strategies are essential for building resilience against emerging risks and realizing the vision of becoming the Philippines’ first techglomerate, aligning with the goals of proactive mitigation and sustainable development in an increasingly complex global landscape​​.