Megacities - By 2025, 8 of the top 10 megacities will be in emerging markets. What are the implications for risk managers?

By 2025, 8 of the top 10 megacities will be in emerging markets

What does it mean for risk management? A recent seminar organised by Aon discussed the implications for executives.

The 2013 International Growth Seminar brought experts from a wide variety of industries to discuss the last decade’s unprecedented challenges and the opportunities they create.  With speakers including John Cridland, Director General of the CBI, Dr Kurt Karl, Head of Economic Research & Consultancy, Swiss Reinsurance and Baroness Manningham Buller, the delegates discussed international growth, and emerging markets.

The event attracted a strong panel of speakers, who looked at all aspects of international growth from export finance, the impact of the eurozone, through to trade dealings between the US and China and barriers to M&A activity.  The event also examines the tools and approaches available to firms to ensure that risk and people are managed efficiently in an ever-changing global landscape.  Senior executives from Aon also participated.

It was recognised that global organisations face unprecedented levels of risk.  The scale and magnitude of threats to operations continue to grow including primary exposures of property and casualty and directors and officers liability.  These issues are  becoming more complex because of increasing regulatory requirements and stakeholder expectation.  As Jon Stanton, Group Finance Director at The Weir Group pointed out, there is a real challenge for organisations to only take on the opportunities that are closely aligned to their risk appetite. 

“We adopt a crawl, walk, run approach to entering new markets – however attractive they appear – allowing us to assess risk on the ground and adjust our risk appetite on the basis of meaningful market knowledge.”

Providing insights into the future of emerging markets, Dr Kurt Karl, said "The growing global population of emerging markets includes a Chinese middle class which will have tremendous purchasing power in the future.  At Swiss Re we anticipate that the emerging market share of the global economy will grow to 50% by 2025, with eight of the world’s top 10 megacities being in emerging markets. This will be a gamechanger in the way the world economy is shaped.  This rise will inevitably have strong implications for global energy consumption and infrastructure investment.  Recent events have also highlighted how political instability and unrest is becoming a key macro downside risk.”

Delegates also took part in breakout sessions which focused on supply chain issues, communication, corporate transactions and benefits liabilities.  The move away from imposing a leadership structure from the central company to using local expertise imbued with the core philosophy of the central model was a recurring theme throughout the event.

Jonathan Rigby, Head of Marketing for Manchester United outlined this approach.  “We have decentralised our global approach which is far more effective.  We have to ensure that we carry our values across the world no matter where we are active.  To achieve this, we work hard to ensure that our teams have an intrinsic feel for the brand and how it should be represented, no matter where they are in the world.”

Closing the day with a slightly different perspective, Baroness Manningham Buller, the former head of MI5 outlined how the sheer number of potential threats can be daunting.  “You need to be constantly thinking about the what ifs and scanning the horizon.  Things can happen that you simply cannot mitigate, so you need to be flexible at all times.”

Summing up the event Alan Reid, Managing Director, Global Clients at Aon Risk Solutions said "Against the ongoing instability of the global economic market, it is critical that senior executives understand the ever-changing global landscape and how the future of the international business landscape could look.  This will help to mitigate risk in the future and this event empowers firms' resilience for the long term. We are pleased to have partnered Swiss Re Corporate Solutions to hold this market-leading symposium which provided in-depth insight into the future while exploring the current impact of the volatile global economy."

For more information and to access the presentations please go to:

https://www.seeuthere.com/event/m1312d79-4ELZ9CAIH6LNS

Dr Kurt Karl, Head of Economic Research & Consultancy, Swiss Reinsurance

John Cridland, Director General of the CBI

Alan Reid, Managing Director, Global Clients at Aon Risk Solutions