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2014, Apr 21

Risk Management: Lessons From Ground Zero

Risk Management: Lessons From Ground Zero

by Cesar Bacani, 12 March 2012

As CEO of Sino-Canadian joint venture Sun Life Everbright Life Insurance from 2004 to 2007, Janet De Silva knows how to manage risk in the world’s second-largest economy. “The biggest risk,” she recalls, “was the lack of experience within the workforce.”

 
Now Executive Director of Richard Ivey Business School in Hong Kong, De Silva (pictured) continues to focus on risk management in the classroom and business seminars.
 
“The true risk that we’re seeing now is more enterprise-wide risk, where you’re getting into lines of business where you don’t fully understand the tail impact,” she told CFO Innovation’s Cesar Bacani. Excerpts:
 
You were CEO before the global financial crisis in 2008, but I imagine risk management was a key part of insurance operations even then.
Risk management was huge, but I think the bigger risk was in the context of China at the time I was working there. The biggest risk was the lack of experience within the workforce.
 
I had to replace the CFO soon after I moved to the China operations for a number of justified reasons. But as I was trying to recruit, I cannot tell you the number of people that I interviewed that had apparently good credentials on paper – but they did not understand that accounts receivable was not cash. It seemed there was just this lack of that kind of experience in the market.
 
So you may have great corporate policies and models and everything else, but if the person doesn’t have the experience to apply them, then the models are useless.
 
We did not have a risk officer when I joined the organization, but we had a really good internal auditor. We could not find anyone in the market with a risk management experience base, so we decided to invest in her.
 
Every quarter, she would spend three weeks in our regional office in Hong Kong working with our risk management team. And every year we’d send her out to Canada to the global headquarters’ risk management department to work for four weeks.
 
She was extremely loyal to the company because she was getting all these new skills that were in high demand. The corporate governance team really got comfortable with her because they got to see her quite a bit. They could see her character, could see her thought process, had a rapport with her. It worked out really well.
 
That was the level of investment that you needed to make to protect against the risk. That really comes down to the talent risk in your organization.
 
In the meantime, while you were fixing the talent, you were not really moving aggressively in China?
No, no. The world doesn’t wait for you to get everything right. You’ve got to keep going. You’ve got a board that expects results. We increased from two cities to 14 cities during that period of time; we increased from a thousand people in the workforce to 4,000.
 

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