Swire Pacific case study: managing risk from a multinational perspective
The Hong Kong-based publicly listed company Swire Pacific employs more than 90,000 staff across a diverse portfolio of operations covering property, transport, engineering, beverages in Asia and the Americas.
Swire Pacific’s Group Head of Risk Management Tom Cohen described the steps his company had taken to improve its risk maturity in the face of such significant industrial and geographic diversity.
Swire Pacific has had a risk management committee in place for about 15 years, but 10 years ago, in recognition of the diverse nature of its businesses, the company created new overlays to accommodate that diversity.
The result was the formation of a group risk management committee comprised of the CEOs of each of Swire Pacific’s five divisions, as well as the group CFO to act as the chair. Swire then identified specific areas of risk and selected the subject matter experts from each of the divisions to form additional committees. These communicate and share information on common risks, with the goal of generating policy recommendations for the risk committee. Swire Pacific also created sub-groups of risk champions in functional areas that the committees can tap into when needed.
As the Head of Risk Management, Cohen described his role as the organiser-in-chief of these committees, sitting on all the functional risk committees. He reports to the group CFO, and manages a team of six specialists, including for cyber risk. They ensure risk processes are carried out according to standards, but also get involved in scenario analysis and reviews of divisional risk.
Cohen also oversees the central committee on health and safety, working with experts from each of the divisions, and works closely with the public affairs team on crisis management plans. Cohen described a key part of his role as being to highlight emerging risk issues and challenge the status quo through involvement in workshops in risk registers. Hence cyber was a key focus, along with the need to assess the impact of disruptive technologies on Swire Pacific’s investments in property and other industries.
Another significant area of risk focus came from Swire Pacific’s investments in mainland China, where any shock to the economy had a direct impact on investments there and flow-on impacts to its global activities.
In terms of insurance, Cohen said Swire Pacific generally worked on country-based programs with decisions based on pricing and market fit, although initial steps have been taken to globalise programmes where appropriate.
With such a diverse portfolio of businesses, streamlining risk management was always desirable. But Cohen said ultimately the five individual businesses had their own risk appetites. Hence he and his team worked to instil a risk culture through sharing of best practice, and aligning divisional teams to adopt agreed methodologies to ensure a more consistent approach to measuring, reporting and identifying risks.
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