Inextricably Linked, for Better or for Worse

Last week, more than 30 senior risk officers from 12 countries across Asia Pacific gathered at the second annual FICO APAC Chief Risk Officer Forum in Bali, Indonesia. Hosted by FICO and moderated by IDC, the forum provided a venue for us to have an in-depth discussion around what’s ahead in 2012. What challenges and opportunities await us? How can we do our part to drive global economic recovery? How do we ensure our own businesses are healthy and profitable?

We face these questions during a unique, volatile time. That volatility is the hardest thing to manage. 

I was not surprised by how much of the discussion focused on what’s happening in other parts of the world – not a 10-minute span went by where the US or European crises went unmentioned. Particularly Europe, where the sovereign debt problems of several countries have tainted banks throughout the region. And threaten to affect our own businesses in Asia Pacific.

And here in Asia, a different concern has emerged: namely that the rapid rate of growth in countries like China and India may be leading to speculative bubbles, heightening the risk that loans to consumers and small businesses may soon become non-performing.

We can’t solve all of these problems. We need to focus on what we can affect.

One takeaway was clear from this year’s discussion – and it echoes what we heard at FICO World last month in New York. Risk managers are waking up to the realization that they now have a responsibility to drive – or at least enable – profitable growth. A power shift is occurring, with risk management and CROs gaining new importance. This was necessary because in the years before the recession, risk management’s voice was often ignored. Now, their job isn’t “When can we say no?” it’s “How can we say yes?”

The group heard from fellow bloggers Dr. Andrew Jennings on risk strategies for profitable growth, supported by a distinguished panel of senior risk officers, as well as Chisoo Lyons and a top Korean credit card issuer on how they are using new FICO analytics that forecast credit risk under different economic scenarios to get a more forward-looking view of risk. Lastly, we heard from one of the big four Australian banks on how understanding behavior through FICO analytics plays out in the area of fraud, a hot topic for all of us.

It was a rich discussion – and we’ll be blogging more about it over the next few weeks. Stay tuned.