Relocating is a risky business. Global mobility professionals know that they need to ensure that assignees are looked after, and that all risks are carefully assessed and mitigated. They need to be compliant, and of course they want the expat experience to be a happy, positive, successful one from a business point of view.
But global mobility people are not the only ones weighing up the risks. The specialist moving companies that they hire are duty-bound to manage risks carefully too. As an organization, FIDI understands the importance of risk management and regularly raises awareness among its members, notably through a recent introductory workshop on risk management in the relocation industry, hosted by EY.
The changing face of risk management
At the recent FIDI Conference held in Amsterdam in March 2019, Keren Yagel Brody and Thijs Deweerdt, senior managers and in-charge of the FAIM auditing process at EY, spoke about the way risk management is changing as the relocation industry itself evolves.
“There have been a number of huge changes – especially in terms of processes. Today there are so many different parties involved in order to generate revenue. Everything used to be done in-house, while today companies rely a lot more on outsourcing core services. That seems to make jobs easier, but it actually makes the industry as a whole more complex and more interdependent. Along with technological innovation – and data privacy is especially key here – the global mobility industry is no longer the ‘old-school’ industry it was before.”
Keren also offered advice to FIDI Affiliates preparing for their FAIM audit – and by extension, any company wanting to implement a process of due diligence: “Remember that risk management is an exercise you need to do with different parties in the organization. Try to bring as many different points of view into the discussion as you can, because it is subjective. However, if you do it right, you can create or save a lot of value for your company – whether it’s small or large, these exercises are often quite similar. The knowledge for each unique company is there, it’s just a matter of applying it in the right manner.”
How you can assess and mitigate risk
There are seven specific types of events, but, in general, operational risk comprises parts of compliance, credit, strategic, reputational, market & liquidity risk. Yet the way operational risk is handled can be distilled into two key factors: assessing risk and responding to risk.
The specialists at EY have identified 10 main risks associated to global mobility. Highly similar topics were also echoed in risk.net’s annual assessment of operational risks in 2017:
- Organizational change
- IT failure
- AML & sanctions
- Physical attack
- Geopolitical risk
How do you respond to those risks? By recommendation of Keren, keep it practical. We see four possible risk responses:
Identify each and every risk through teamwork and brainstorming. Afterwards, catalogue and prioritize each one to determine your priorities. For risks that could cause only minimal disruption, acceptance can be a valid risk management strategy.
In essence, acceptance is acceptable only when you have determined that there are better uses of your resources.
When a certain risk has the potential to fundamentally impact an assignment, project or activity, avoidance should be explored as a first step.
For instance, if an expat is headed to a politically unstable region right before a hotly contested election, it could be a good idea to postpone said relocation and re-assess the situation afterwards. Yes, avoidance often comes down to common sense and informed decision-making.
Commonly perceived as the least favourable option since it gives control over to another party. Recently, with the backing of specialized companies, such as FAIM certified companies, risk-outsourcing has become more popular than ever before.
In essence, you task a third party to take the associated risk – and pay the price.
Mitigation is the most obvious and wide-spread risk management strategy. It consists of preparing a series of actions to minimize the impact of certain risks – especially useful for countering large risks.
In the global mobility industry these risks have been identified by EY as cyber threats/ hacks and regulatory incompliance. Both issues leave no middle ground and remaining on the wrong side means eventually paying a potentially very high price.
It’s interesting to see how risk management is perceived by others in the global mobility industry. Relocation companies may be very different to the global enterprises they count as their customers but you both have a duty of care towards the ultimate beneficiary: the expat.
Seeing risk management from their perspective can only help you to better understand your own position and help you set up your own risk management policies. Above all, you have to be sure all parties involved adhere to the highest quality standards and know how to mitigate certain risks. Did we mention that FAIM certified FIDI Affiliates are audited by independent EY auditors every three years?