Risk management: perceived vs real risk

globe risk matrix
Is technology helping to close the gap?

Charlie Lyon assesses the mismatch between perceived and real risk in the 21st Century and asks if technology is friend or foe when it comes to narrowing this gap

What are the worrisome uncertainties that keep travellers up at night? Fear of arrest in Iran? Being caught up in a protest in Hong Kong? A terror attack in Europe? Or whether the Boulevard Périphérique is jammed?

In early 2018, International SOS and Control Risks released a new travel risks insight called Rethink Unpredictable – drawing on three years of business travel medical, security and assistance data and analysis – that challenged the general perception of travel risks in Australasia. One of the key findings was that while travellers and managers were mainly concerned with terrorism and kidnappings, in reality they were much more likely to make a claim for a road-traffic accident, or a regular travel disruption.

Sensationally skewed

Sally Napper, Australasia Security Director for International SOS and Control Risks, revealed that 80 per cent of business travellers had actually modified their plans because of security concerns, and 51 per cent of those modified their plans because of concerns about terrorism. However, while eight out of 10 companies’ travellers experienced a medical and/or security incident while abroad, the vast majority of these incidents were medical issues that would be seen as mundane if contracted when at home, or could have been avoided entirely, such as gastrointestinal problems, flu, contagious diseases and insect-borne diseases. In a podcast on rethinkunpredictable.com.au, Napper said: “Terrorism has dominated the headlines for the last couple of years and has led to this perception that terrorism is a number-one risk for travellers travelling all over the world. The reality is that risks haven’t changed. Terrorism has not suddenly become the greatest risk to you while you’re travelling overseas. Businesses do worry about terrorism. Terrorist attacks will continue, but the perception will be far greater than the risk itself. Civil unrest will also continue, and political changes […] will continue to dominate the headlines, but they’ll have only an incidental risk to travellers. Key to overcoming some of these perceptions and really understanding the reality is to find timely, credible and accurate information about the risk environment.”

There’s danger in carrying on with a skewed perception of risk, believes Jonathan Brown, Risk Team Manager for CEGA in the UK, which has recently provided services in destinations such as Libya, Nigeria, Angola and South Sudan. “Flawed perceptions of travel risk can lead organisations to make poor risk-mitigation decisions,” he said. “For instance, they may prepare employees for worst-case scenarios, such as terror attacks, and forget to promote basic precautions, such as providing staff with an emergency assistance contact number, or advice about effective hand-washing to avoid disease.

“Others may assume that traditionally safe destinations are largely risk-free. But there is increasing demand for travel tracking even in destinations close to home.”

In areas of conflict or political unrest, major risks like injury or kidnapping can overshadow the threat of non-emergency medical problems in risk-assessment exercises, Brown says. But trouble on the ground can make access to routine medical care hazardous; quickly turning a common complaint like a chest infection or gastroenteritis into a major worry.

risk graph

Integration is the answer

This kind of situation, Brown believes, highlights the need for integration – not only for medical and security risk management provision, but also uniting pre-travel planning with real-time awareness of both medical and security threats. If an emergency does occur overseas, fragmented medical and security risk management can complicate and delay access to life-saving information and emergency responses.

“Think of a road ambulance in a high-risk area needing a security escort to reach hospital safely,” said Brown, “or of sudden changes to political stability, [how it affects] transport networks or hospital accessibility. The best medical and security risk management programmes offer web and app-based access to tailored pre-deployment training, real-time intelligence ‘on the ground’ and itinerary-based or live tracking.”

Matthew Judge, Group Managing Director of Anvil Group, also explained how integrating risk into the business travel approval process highlights and helps manage risk. “Although the use of business travel approval systems has become the accepted norm for many, these have historically focused on controlling costs and managing travel budgets,” he said. “With an increased awareness and focus on risk, and growing concerns around safety and security, risk is becoming a key approval factor. It’s no longer about approving or rejecting trips based primarily on cost constraints. It’s a huge step forward in travel risk management.”

Judge also believes that larger, well-established corporations are, on the whole, good at understanding risk, but says: “Where we do tend to see some gaps are in the newer, smaller organisations, who are potentially less adept at understanding or managing risk. Smaller organisations typically tend to be more cost conscious and have fewer stakeholders to help manage risk and that’s where it can fall down. They either don’t want to invest in understanding or mitigating risk because it’s seen as a cost, but they potentially don’t have the right knowledge base in-house to understand how to manage those risks correctly.”

risk barometer

A changing industry

James Page, Senior Vice-President and Chief Administrative Officer at AIG Travel in the US, believes that, when devising policies, it is not wise to be swayed by public demand. “We do not adapt policies to cover perceived risks that may be created by the media,” he revealed. “Our focus is on educating about risks and helping clients protect against them. We have adventure travellers going to off-the-beaten track destinations all the time. A typical person might say: ‘Why would you go there? It’s too risky’, but the traveller’s view is: ‘Because it’s there, and I want to go see it’. Risk tolerances are very, very different from one person to the next, and cultural tolerances vary regarding what travellers are willing or not willing to do, so we can’t really consider risk a one-off thing. It’s not.”

Adventure travel is just one way the industry is changing and affecting risk management. Other developments include the rise of the sharing economy and technology. Cyber security is a concern for business travellers when it comes to privacy, potential hacking threats and what is and isn’t secure and legal in different destinations.

The Ipsos MORI Business Resilience Trends Watch 2019 survey painted a picture of a risk management industry that’s out of step with a modern workforce, especially when it comes to technology. It found only one-third (33 per cent) of surveyed organisations covered cyber security in their travel policy and just 14 per cent covered shared economy services.

It also revealed that the widening demographic of the business traveller wasn’t taken into account. With increasing equality and diversity in the workplace, the profile of the modern business traveller is changing, and a region that may be perceived as safe for the majority of workers may be high-risk for another, depending on their gender, sexual orientation, age or if they have a disability. The study found that just over one-quarter (26 per cent) of travel policies contained considerations for female travellers, and considerations for LGBTQ+ travellers were covered by just nine per cent of policies.

However, despite these findings, Claire McKinnon, UK Sales Director of Healix International, believes that she has seen an increase in knowledge or at least awareness of duty of care of how staff believe they should be looked after while on business travel or working abroad. “Clients are definitely promoting more education to their staff on cultural, political and health information specific to destinations and geographies visited,” she observes. “We have also seen employers wanting to make sure their staff are better educated regarding specific communities, and we have developed e-learning courses on LGBTQ+ travel safety and security advice for females as a result.”

eye examination

Talking technology

McKinnon believes that media has its role to play in ramping up client concerns about global travel issues but pointed out that, more often than not, that international assistance companies are picking up developments faster than the media by using social media scanning tools and on-the-ground sources. She said: “Tracking solutions and integrated travel and expense data (auto check-ins based on expense transactions such as corporate credit cards and Uber) have enabled effective monitoring of staff and travellers.

“Tracking has always been a tricky [subject] in terms of employee compliance; tracking that happens in the background based on expenses and other ‘passive’ data points that do not require active engagement from the traveller is the future. Additionally, travellers are increasingly seeing this as a safety benefit to them rather than an infringement on their activities,” she told ITIJ.

Anvil’s Judge agrees that technology is fundamental to reducing the gap between risk perception and reality, and points to its Riskmatics risk-management system – ‘an awareness, alert and response system powered by real-time global data from thousands of reliable sources’. “In essence, technology such as ours helps organisations to research and understand relevant risks in certain destinations before they travel or do business there, and then also understand how those risks and threats may change dynamically on a daily basis."

business travellers airport technology

The next step

The Business Resilience Trends Watch 2019 data showed that 47 per cent of business decision-makers said that travel risks had increased over the past year (2018). However, this was a drop from 63 per cent in 2017 and 72 per cent in 2016. In an increasingly globalised world, it seems that we are feeling safer year on year. And although we face new risks – cyber threats and pandemics – that know no borders, perhaps technology, combined with education and integration is making us feel more in control when we travel.

Going forward, Judge believes we can further improve communication and education to narrow the gap between real and perceived risk. “Insurance companies need to realise the benefit of proactive information and activities and change their ways from traditionally being purely ‘response’ providers," he told ITIJ. “Working with risk management companies can help them to better understand the impact of major incidents and natural disasters and mitigate risks before they occur to their insured populations.”