The business environment is becoming increasingly challenging, with a fast-changing macroeconomic environment, growing pressure around climate change and sustainability, market volatility, and supply chain disruptions – to name just a few issues. No matter the sector, companies must mitigate these macro risks while still investing in their businesses to compete and grow.
The state of risk
Increasing interest rates, access to credit, a shortage of talent, the need to digitalize, climate risk, and cybersecurity are just some of the reasons nearly half of executives believe they face more risk now than in the past. This is according to FIS’ latest Global Innovation Report which reveals executives’ attitudes about today’s macro risks and their strategies for managing them.
When analyzing the impact by industry, strategic risks (62%) are top of mind for non-financial businesses in Singapore, while financial services firms are most concerned with financial risks (67%). Globally, insurers are most likely to have been affected by environmental and transition risk (63% vs 49% across all industries).
However, executives are not resting on their laurels when it comes to taking action on their most concerning risks. Assigning existing staff to take responsibility, restricting business models, and adopting new technologies are some of the key approaches taken by businesses in Singapore to manage such risks.
Innovating for competitive edge
Innovation – the conception, development, and delivery of new products, services, processes, and business models – also plays an important role in managing the risks currently faced by organizations. There are different innovation strategies a firm can pursue. In Singapore, the top focus is technology and system innovation (51%), as found by FIS’ research.
In addition, companies globally are becoming increasingly aware of the risk posed by climate change and shifting consumer sentiment around ESG strategies. Alsom, it’s influencing innovation strategies; executives say their decision to invest in these strategies is driven by internal sustainability goals and pressure from stakeholders to address ESG principles.
This year’s COP28 brought together a record number of attendees. Speaking at COP28, Ravi Menon, Managing Director of MAS, also noted the importance of innovative solutions, alongside public-private partnerships, to drive change.
New technologies drive change
In order to stay competitive, firms are embracing familiar technologies like cloud computing and digital technologies for the customer experience, such as open Application Programming Interface (APIs).
But they are also eager to explore more leading-edge developments. With strong regulatory support, financial services firms in Singapore are accelerating their adoption of emerging technologies and experimenting with AI, Web3, and more. AI is an area where major investments are playing out, as seen at the Singapore Fintech Festival last month.
According to the Global Innovation Report, 57 percent of Singaporean firms are currently using Generative AI and 51% are using other AI technologies. AI has the most growth potential out of all the technologies covered in the research, with a further 41 percent expecting to use the technology within the next 12 months. The anticipated growth comes amidst the Singapore government’s plans to intensify AI adoption and grow the AI talent pool in Singapore, as part of the updated National AI Strategy (NAIS 2.0).
While the vast majority of business leaders surveyed agree that new technologies help them mitigate macro risks, they also cite numerous other benefits, from competitiveness to profitability and revenue growth.
Overcoming roadblocks
Despite the importance of innovation, some firms are being held back. In Singapore, the top challenges that firms flagged when it comes to implementing innovative solutions are limited budget (59%), followed by lack of in-house expertise (58%).
Bigger firms might be more likely to have the financial resources and in-house knowledge to implement innovation. However, we are also certainly seeing smaller firms be nimbler and more open to adopting new technologies. Ultimately, each organization will have its own approach to deploying innovation based on its unique objectives, opportunities, and challenges.
Implementing new technologies effectively consumes resources and takes skill. Businesses need to balance the return on investment, considering the associated costs and time needed to build effectiveness alongside the potential benefits.
The economic and regulatory environment continues to change fast. But no matter the climate, innovation and the latest technologies will be the key to remaining competitive and protecting one’s business.
Kanv Pandit is Group Managing Director, APAC, Banking Solutions at FIS.
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