SVA – Finding Opportunity in Crisis (危機)
2022 continues to present extreme challenges to businesses across the globe. Confronted with prolonged declines in revenues, wrought by the Omicron outbreak, firms now face additional, stark challenges.
Russia’s decision to conduct a “military operation” in Ukraine, announced at the time of writing, promises to deliver further shocks to an already unsteady political and financial order, in terms of higher energy prices and greater uncertainty, on top of the grave human costs that will unfold from this development.
The outlook in the Asia Pacific region also depends on fractious Sino-American relations, with particular implications for Hong Kong, Taiwan, the Chinese technology sector, financial flows, and regional trade and tariffs. The prospect of spill-over into seemingly unrelated matters is real.
At the local level, Hong Kong’s previous turbulent social unrest is seemingly well under control, with protest suppressed and robust national security legislation in place. Nonetheless, the imposition of harsh quarantine measures, with the imposition of mandatory testing coming in March, could bring frustrations to the boil.
More broadly, the PRC’s national “zero COVID” policy – which includes Hong Kong and Macau – and ever increasing economic decoupling between the PRC and the USA and its allies, continues to reverse a decades-long trend of financial integration, freedom of movement, and commercial globalisation in the Asia-Pacific region as a whole.
SVA’s Role in these Challenging times
SVA has been at the heart of these challenges throughout 2021 and into 2022 – 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), even at key inflection points such as this.
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
SVA has helped executives and international businesses adjust to these new political circumstances, with independent and timely intelligence and analysis, notably in Hong Kong, where increasing isolation, imposed by pandemic controls, has resulted in a particularly uncertain business environment.
Banks have also been 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 decisive decision making, has left substantial global players at significant risk, particularly to increasing financial sanctions and counter reactions.
That challenge notwithstanding, within Hong Kong we remain optimistic that the present disruption will be short-lived, mirroring the pattern seen in other jurisdictions, which initially faced a sudden surge in cases that subsided in relatively short order.
SVA has 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 still a buyer’s market.
SVA also maintained a focus on the gaming industry in Macau, guiding clients through this period of policy upheaval and uncertainty as the present concessions approach their June 2022 expiry date. Political risk is the primary factor here, with attention to Sino-US relations.
Weakening conditions have resulted in an upsurge in fraud and financial crime. As such, SVA has assisted private and listed companies in conducting 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 also maintained a world class crisis containment and kidnap & Ransom consulting and responsible capability working with major insurers.
Charting a 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 charged and precarious atmosphere.
A related concern is regulatory risk, liable to intensify owing to the decoupling of China and the US, and the new sanctions on Russia. The burden of compliance, already high, will worsen, and the imposition of more sanctions could prove destabilising for financial institutions. Companies must respond. SVA stands ready to gather independent and actionable intelligence for boards, and to assist in preparations.
Finally, companies 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 threats, such as concerted intellectual property theft, cyberattacks, targeting by predatory authorities, or the outbreak of hostilities in the South China Sea, Taiwan Straits, or, as currently seen, in Eastern Europe. Political risks are at a much 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.
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.