SVA – Finding Opportunity in Crisis (危機)

SVA

2020 has presented extreme challenges to many businesses. Confronted with sudden, severe, and unexpected declines in revenues, arising from the COVID-19 outbreak, many firms have gone to the wall, or may shortly do so, when government, “life-support” payments cease.

In-and-around the Asia Pacific region, an increasingly fraught Sino-American confrontation has exacerbated threats, visible in sparring over business and technology, diplomatic tussles, soft-power and disinformation initiatives, and, most worryingly, in an out-and-out military test of strength over the South China Sea, and Taiwan.  Australia, other members of the “five eyes” intelligence alliance, Japan and India risk being drawn into this fracas.

At a local level, the introduction of the National Security Law in Hong Kong, following a lengthy period of violent civil unrest, has not only added to tensions, but has also resulted in Hong Kong’s becoming a pawn in great power politics, with some international banking institutions now in the firing line.

All told, the post-Cold War global system, based on increasing economic and financial integration, freedom of movement, and commercial globalisation, has changed irrevocably. 

A new regime is emerging, of much more intense geopolitical rivalries, of greater appetite for protectionist trading measures, and of intensifying political and regulatory risks.  There has rarely been such an inflection point, arising in such a short time frame. 

SVA’s Role in these Challenging times

SVA has been at the heart of these challenges throughout 2020 – working with our clients to assist in dealing with immediate corporate crises, as well as to spot opportunities as they emerge. An ancient Chinese saying states that there is “opportunity in danger” (危機).  There has rarely been such an inflection point in such a short time frame.

In the course of this work, SVA has noted an acute need for accurate and timely intelligence, channelled directly and expeditiously to the Board of Directors level.  Such intelligence can assist in managing threats, mitigating against risks, and, equally importantly, in identifying, and seizing, opportunities.

Riding out the storm and seizing the initiative

During 2020, SVA has helped many executives and international businesses adjust to new political circumstances with independent and timely intelligence and analysis, notably in Hong Kong, in the wake of protests from mid-2019, the passage of a National Security Law in May 2020, and subsequent changes to foreign countries’ treatment of Hong Kong.

Banks have been particularly slow to appreciate the nature of these challenges, and some have been clumsy in their responses.  Messy, often “matrix”, management structures, and a lack of effective decision making, has left some substantial global players at significant risk, particularly to financial sanctions.

SVA has also helped companies identify and grasp opportunities in the current environment. This work has entailed examining political liabilities, and providing advice on how to structure deals so as to mitigate risks. After all, it is a buyer’s market.

SVA also maintained a focus on gaming in Macau.  In particular, CEO Steve Vickers gave evidence to an inquiry by the Independent Liquor and Gaming Authority in New South Wales in August 2020, relating to the alleged activities of triad societies and junkets. Looking forward, Japan may proffer opportunities, as the new Prime Minister Suga was a champion of gaming liberalisation.

Weakening conditions have also resulted in an upsurge in frauds and financial crime.  As such, SVA has assisted many private and listed companies in discreet internal investigations, in carrying out asset searches, and in handling regulatory issues, in jurisdictions such as Hong Kong, Singapore, the People’s Republic of China (“PRC”), Indonesia, and Thailand, the EU and the US. 

Perhaps most importantly, SVA has helped businesses and high net worth family offices to strengthen their ability to withstand disruption, and to enhance the security of family and facilities. Key measures have included threat assessments, preparation of contingency plans, and the implementation of security measures.

SVA has maintained a world class crisis containment and kidnap & ransom consulting and responsible capability.

Charting the new course

Looking forward, a critical threat to business relates to the precipitous decline in revenues, affecting staff morale and company capacity.  Negotiating key political and regulatory risks will be crucial, given the costs of a clumsy misstep in such a politically charged and precarious atmosphere. 

A related concern is regulatory risk, liable to intensify owing to the decoupling of China and the US. The burden of compliance, already high, will worsen, and the imposition of sanctions on Hong Kong could prove destabilising for financial institutions.  Companies must ready themselves.  SVA stands ready to gather independent and actionable intelligence for boards, and to assist in preparations for sanctions.

Finally, businesses really must consider broader geopolitical risks, not only in terms of where investment is safest, but also as to how best to protect business interests against outside risks, such as concerted intellectual property theft, targeting by predatory authorities, or even the outbreak of hostilities in the South China Sea or Taiwan Straits. These risks are currently at an elevated level.

SVA can also assist with strategic planning in such a context, with attention to matters such as the distribution of capacity and assets, the integrity of communications and key infrastructure, and practical guidance for the security of staff. 

About SVA

SVA (www.stevevickersassociates.com) is a specialist risk mitigation, corporate intelligence and risk consulting company.  The firm serves financial institutions, private equity funds, corporations, high net-worth individuals and insurance companies and underwriters around the world. 

SVA has three core lines of business, which are:  Business Intelligence and Political Risk; Corporate Investigations; and Special Risk. SVA also has a dedicated crisis management team which, for our retained clients, stands ready to assist companies during crisis situations.  Retained clients pay an annual fee for a 24-hour response capability.

SVA is based in Hong Kong and Singapore, and is the only firm with local and senior expertise drawn from Intelligence, Operations and research functions of the former Royal Hong Kong Police Force.