Ventiv Technology

2 0 | 360º Aon eSolutions ABOITIZ EQUITY VENTURES (AEV) IS A PHILIPPINE-BASED CONGLOMERATE WITH DIVERSE INVESTMENTS THAT INCLUDE POWER GENERATION, POWER DISTRIBUTION, BANKING, FOOD AND LAND DEVELOPMENT. ALSO UNDER AEV IS THE ABOITIZ FOUNDATION, INC., THE COMPANY'S SOCIAL-DEVELOPMENT ARM AND WEATHERPHILIPPINES FOUNDATION, INC., A WEATHER-SERVICES ORGANIZATION THAT PROVIDES FREE WEATHER INFORMATION TO COMPLEMENT THE PHILIPPINE GOVERNMENT'S EFFORTS IN DISASTER RISK REDUCTION AND MANAGEMENT. Established in the late 1800s as a family business with roots in the hemp trade, AEV today has a market capitalization of almost U.S. $6 billion and is listed on the Philippine Stock Exchange (PSE). Several of its largest business units, namely UnionBank of the Philippines and Aboitiz Power Corporation, are listed separately on the PSE. Why is risk technology so important to the group, and how does the Aon RiskConsole risk management information system fit in to AEV's overall strategy? The answer lies in AEV's efforts to improve its enterprise resilience. This article traces AEV's unique journey to improve its resilience, and their ability to cope with—and thrive amidst—change. WHY PRIORITIZE RESILIENCE? For Philippine businesses like AEV, two factors have combined in recent years to make risk management a more complex— and more essential—function: the continuing strong growth of the Philippine economy; and more stringent regulations around corporate governance. In such a dynamic business environment, the ability to cope with change and, as a result, to ensure long-term sustainable growth has become a top priority. The AEV board of directors and group CEO, under the leadership of Mr. Erramon I. Aboitiz, have therefore committed to improving AEV's enterprise resilience by, among other things, protecting the group's reputation, core investments, team members, customers and communities. To meet these objectives on both the group and subsidiary levels, the AEV board of directors and management work closely together to: ›› Assure all stakeholders that key risks are being identified, assessed and actively treated ›› Ensure that risk appetite and tolerances within the subsidiaries are appropriate and aligned with the group's growth strategy ›› Ensure that adequate controls, processes and technology are in place, so that performance and reporting expectations are met STARTING THE ERM JOURNEY In 2010, AEV launched its group-wide enterprise risk management (ERM) program. Two years later, AEV and its business units began an assessment of its risk management maturity and how it compared against the leading practices of similar organizations globally. At the 2010 Aon Global Risk Consulting annual seminar, AEV was introduced to the Aon Risk Maturity Index (RMI). The RMI objectives and model were a perfect match for what AEV was building. The RMI (see the sidebar for details) provided AEV with a great opportunity to review its roadmap and progress toward enterprise resilience. The result of AEV's RMI assessment triggered a recalibration of the group's existing risk management program and gave rise to an enhanced three-year plan geared towards achieving a risk maturity level 4 (out of 5). Achieving level 4 means that AEV and its subsidiaries have a clear understanding of the organization's key risks as well as the resources and processes necessary to consistently address those risks. Achieving level 4 also means that AEV uses qualitative and quantitative risk management techniques such as a set of loss and tolerance guidelines, assurances that risk management information is considered in key decisions, and the consistent application of risk analysis and treatment across the group. RISK TECHNOLOGY = TRANSPARENCY AND CLARITY In order to reach this level of risk management sophistication, AEV determined that it needed a better understanding of its risk and risk-related data. In consultation with Aon, AEV decided to implement a technology platform that would facilitate risk management dashboards; track key risk indicators; and enable the group to realize its risk management strategy across the group of businesses. Moreover, this integrated set of technology solutions would improve risk transparency and optimize the group's total cost of risk. Risk transparency and clarity are vital to the AEV board's vision for the group's risk management strategy. AEV chose RiskConsole because of its unique integration of risk and insurance functionalities. The Aon eSolutions team (responsible for developing, maintaining and hosting RiskConsole) then began the process of customizing the platform to AEV's unique and diverse business needs. "The challenge was to ensure the data is captured in a consistent way in order to enable AEV to aggregate and drill down into the different asset values," commented Eric Schaap,

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