With the New Year underway Chief Executive Officers (CEOs) may well be contemplating what’s on the cards for their organisations in 2018. For many, expansion into overseas markets will continue to be a strategic priority, but how do companies balance this priority with the risks associated with an increasingly mobile workforce?
In collaboration with the Federation of European Risk Management Associations (FERMA) and International SOS, KPMG have co-published Workers on the Move: Managing New Risks. Based on a recent survey of 377 risk managers, the paper assesses the impact of a changing global business environment on risk for companies and their mobile employees.
Here are four takeaways from the paper:
- Reputation and brand risk are in focus: CEOs surveyed in KPMG’s 2017 Global CEO Outlook Survey put reputational and brand risk at No. 3 on their list of top concerns; in 2016, it didn’t even make the top 10. Companies are increasingly aware of the transparent environment in which they now operate - where negative press can go viral via social media, and public expectations on how multinationals should operate are being redefined (see also: the fair tax debate). The outcome? A renewed focus on proactively managing higher risk areas of business – including business travel – to guard against reputational damage.
- Traditional assignment patterns are changing: KPMG’s Global Assignment Policies and Practices Survey 2017 identifies that over the next five years, 79 percent of businesses anticipate an increase in extended international business trips (3+ months). This reflects wider recent trends, and will have an impact on risk management: while many organisations have well-established assignment policies, business travellers who don’t fit into the usual model can be much more difficult to identify and monitor effectively.
- Compliance and regulatory pressures have increased: The rise in shorter assignments and extended business trips has not gone unnoticed by authorities and regulatory bodies, who are aware that this is a common area of compliance failure and source of worry for organisations. Gradual improvements in data sharing with immigration and overseas tax authorities have been underscored by the recent introduction of the Organisation for Economic Co-operation and Development (OECD) Common Reporting Standard. As a result authorities are starting to get the information they need, and are developing the analytic tools to pinpoint potential non-compliance. Given this environment, the pressure is on for companies to get ahead by ensuring any potential compliance gaps are covered. On the bright side, companies can also benefit from new technology as a tool to increase participation from mobile employees, and better analyse data for compliance purposes.
- A broader interpretation of “duty of care”: Driven in part by the more volatile geopolitical climate in recent years, many of the organisations profiled in Workers on the Move are moving to a more comprehensive travel risk assessment approach, regardless of destination. There is also a growing recognition of health and travel risks that are less conventional: for example 45 percent acknowledged stress resilience and wellbeing as a main hazard, and 23 percent highlighted diversity management as their primary concern.
It is clear that for many organisations there is a high awareness of business travel risk, but real difficulty in implementing a holistic risk management program that addresses mobile employees at all organizational levels. Part of the reason is one of ownership - 44 percent of respondents said they didn’t have a clear owner of business traveller compliance. Working and communicating clearly across business functions is a good starting point; establishing a central point of contact and ownership for business travel risk management as a whole would be the ideal. Workers on the Move provides some examples of best practices to consider implementing.
So, with 67 percent of respondents believing that their organisation’s exposure to health and travel security has risen in the past 2 years, you might be inclined to think that the outlook for risk managers is pessimistic. However, for those wanting to look more closely at their business traveller risk management program, the time is now. With increased CEO focus on brand risk and reputation, risk managers have an opportunity to disrupt current ways of thinking around their mobile workforce, and to create more robust travel risk programs that address the modern global working environment.