Business travel risk rises

Business travel risk rises

By Stuart Collins

Business travel risks are increasing and becoming more complex, with a bigger role for risk managers in mitigating the threat, according to a new report and survey from Ferma.

According to the survey of more than 377 risk managers, 67% of the respondents believe their organisation’s exposure to health, safety and security risks linked to workers’ mobility has increased in the past two years.

Geopolitical risk was found to be the biggest driver (41%) of travel risk, followed by globalisation (39%), evolution of business travellers (37%) and regulation (28%), according to the report, entitled Workers on the move: Managing new risks, published by Ferma in collaboration with International SOS Foundation and KPMG.

Recent years have seen big changes in business travel as new trends emerge, the report states. Globalisation and competition are leading to more business travel and employees working overseas, including in emerging and high risk markets.

According to KPMG International’s 2017 Global CEO Outlook survey, almost half of CEOs at large companies are reassessing their global footprint in response to the changing pace of globalisation and protectionism. However, their strategic priorities include increasing penetration in existing markets and expanding into new geographical markets in the medium term, it found.

Recent geopolitical “shocks” and uncertainty around political risk have impacted the strategic priorities of organisations, according to the Ferma report published this week. For example, Brexit may see companies restructure and conduct their overseas businesses differently. According to KPMG, three quarters of CEOs are spending much more time on scenario planning as they navigate the shifting international climate.

Despite perceived increases in geopolitical risk, CEOs expect their businesses will become more, rather than less, international as they seek opportunities for growth. “An increasingly international business strategy will inevitably bring with it an upturn in cross-border travel by employees,” the report states.

Increased working overseas can bring heightened health and security risks, according to Ferma. Risk hotspots are multiplying and evolving, it says, while the terror attacks in Europe over recent years have shown that the threat is closer to home than many like to think.

“These events have led to an increased awareness of the need for a comprehensive approach by organisations in their obligations towards their international workers and expatriates’ needs,” Ferma states in the travel risk report.

Risks associated with business travel are increasing, believes Marc Burrows, head of global mobility services at KPMG.

“Expanding geographies, particularly into emerging markets, coupled with developed world expectations around risk management and compliance, create a need for a different approach to global mobility operations and increase the risks associated with a mobile workforce,” he commented.

In the short term, growth in business travel and mobility will be focused on Europe and the US, but it is also expected to increase in developing countries such as China, India, Mexico, Brazil, Chile and Colombia. The report predicts a rise in business travel and short-term trips, but a reduction in long-term overseas assignments.

“All of this must be considered in the context of reputation and brand protection being of paramount importance to global CEOs,” states Mr Burrows in the report.

Risk managers need to consider a whole host of risks beyond the health and safety of workers, or the stability of their location, according to the report.

For example, Ferma’s survey of risk managers found that cybersecurity is the number one hazard for business travellers (68%). It was followed by mental health (45%) and the use of social media (33%). Managing diversity was also in the top five (23%).

The report highlights the growing problem of compliance in areas such as income tax, corporate tax, social security, employment law and immigration rules.

The compliance burden on companies with overseas workers and business travellers is increasing, while governments increasingly share data and clamp down on tax avoidance. In 2016, a number of companies were audited by national tax authorities for under-reporting income tax for business travellers.

The report also highlights the increasing levels of diversity in the mobile population, with more women, older workers, and employees with disabilities and different sexual orientations. These can all face additional challenges compared to traditional businesspeople abroad, according to Ferma.

“Organisations are realising they need to factor these different risk profiles into their travel risk management policies. This means providing appropriate advice and accurate information, and ensuring compliance with duty of care and non-discrimination regulations,” it notes.

The survey reveals that 44% of large companies have no clear owner of business traveller compliance. It found that 37% of the companies do not have quality control procedures for immigration processes and 70% do not include immigration within their medical and travel security services protocols.

“Multinational businesses are well aware of the evolving patterns of risk for their workers on the move, especially in the context of the volatile geopolitical situation. Terrorist incidents in major European cities have shown how risk profiles can change sharply, and as we have seen in 2017, natural catastrophes do hit important business centres,” comments Jo Willaert, president of Ferma, in the report.

“Companies believe it is essential for their travellers to know how to prepare for their trips and have easy access to health, safety and security support at all times,” he adds.

Given the increasing complexity of business travel risk, and its potential impact on reputation and business strategy, risk managers are taking on a bigger role in managing the threat.

Ferma’s survey found that 66% of respondents contribute to their organisation’s travel risk management policy and decision process, up from 45% in a comparable 2015 survey. Almost two thirds (60%) of the risk manager respondents say their responsibility for health, safety and security risks has increased during the past two years. One fifth say they play a leading role in this process.

“Business travel remains important to the operation and growth of many companies, from the CEO who flies to a business centre to negotiate a new contract, to the engineer with a box of sophisticated tools for repairs to specialist equipment,” according to Mr Willaert.

“Managing the risks that could damage the success of their travels is part of enterprise risk management and an important element of fulfilling the company’s responsibility for the welfare of its employees, its duty of care,” he notes.

While risk managers tend not to be involved in the day-to-day operational side of travel risk management, they do have a more strategic role through enterprise risk management, according to Ferma.

Risk managers can work with key internal stakeholders such as security, HR, health and safety, insurance, travel and business continuity departments to ensure there is a holistic, cross-function approach to travel risk management and risk prevention, it states. – Commercial Risk Online

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