From floods to bombs to financial crises,
participants at the World Economic Forum on East Asia engaged in a lively
debate on how the region can improve its resilience to a varied set of risks.
Supporting economic growth, participants agreed, was a key part of risk
management:
“If you
have a strong and solid economy, that is the foundation for you to have the
means to deal with shocks,” said Idris Jala, Minister at the Office of the
Prime Minister of Malaysia, adding that ASEAN countries should focus on six to
ten sectors each to build expertise and fuel growth.
Inevitably,
the discussion turned to the financial crisis which continues to rage through
the Eurozone. Although East Asia was not considered particularly exposed, given
that its economies are still weighted towards domestic demand, “we will feel an
impact,” Idris Jala said. However, there was arguably some reassurance on this
front from Naoyuki Shinohara, the Deputy Managing Director of the International
Monetary Fund. “We do not expect the euro to break up…. We do not expect Greece
to exit the Eurozone,” he said, arguing that such a move would be very costly
for the beleaguered country. The situation would be clearer after the national
election there in June, he added.
As East
Asian countries continue to grow, they face a paradox: greater wealth may bring
a greater ability to mitigate risks, but it also creates greater exposure to
risks, given the increasingly interconnected nature of financial markets. Geoff
Riddell, Regional Chairman of the Zurich Insurance Group, highlighted the
“heavily interconnected” nature of today’s risks, and the importance of the
Risk Response Network’s Global Risk Report in mapping them.
In
terms of tackling risks, a variety of approaches were put forward. Jane Harman,
Director, President and CEO of the Woodrow Wilson International Center for
Scholars, USA, said that there had to be better cooperation between the public
and private spheres, stating that poor communication between the two had
hampered the response to hurricane Katrina. What’s more, she said: “Resilience
requires getting the public in different countries prepared. Decisions have to
go down to the grass roots level.”
In a
World Economic Forum Facebook poll on how East Asia can improve its resilience
to risk, the majority of respondents selected “improving access to quality
education”, followed by “urban planning and investment in infrastructure.”
Idris
Jala, meanwhile, called for greater cooperation on a regional level. “ASEAN
countries need to come together and list the major shocks, then provide a
framework and money,” he said. Businesses tended to move faster than
governments in preparing for risks, argued Emirsyah Satar, President and Chief
Executive Officer, PT Garuda Indonesia. Masami Yamamoto, the President of
Fujitsu and a Co-Chair of the World Economic Forum on East Asia, highlighted
Japan’s role in providing innovations to help the “economic rebound”.
In a
region frequently afflicted by natural disasters, including last year’s severe
flooding in Thailand, Geoff Riddell provided some sobering perspective.
“However much preparation is done, nature can overwhelm us.”
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