KPMG’s Annual Report of Challenges Confronting Business Leaders - Recap Impacting Asset Management
This year's KPMG survey of business leaders, Keeping us up at night: The big issues facing business leaders in 2023, reflects the challenging environment that organisations have experienced in the past few years. Many of the themes are relevant to the asset management industry,
The top concerns for Australian CEOs and Business Leaders have undergone a market shift, focusing on the economy, the shortage of skilled staff, and cyber security. In contrast, the previous year saw remote work, ESG strategies, and diversity as the main concerns. These changes may be due to the operationalisation of previous issues or the emergence of more time-sensitive issues.
The Economic jitters
The current economic outlook involves slowing demand, higher interest rates, supply chain normalisation, and moderating government spending. CEOs are determined to achieve revenue growth by maximising market share in existing markets and expanding into new ones.
Furthermore, leaders and their asset management teams, likely faced with tighter budgets, will be pressured to optimise costs and take a whole-of-lifecycle approach to assets to ensure optimal returns. An asset platform that can offer a multidimensional view of current and future risk liability, such as AssetFuture’s proprietary risk profiling methodology ACCRI, will help navigate the uncertainty.
Continuing skills shortage
The challenge of finding and retaining quality staff in Australia has intensified, with the unemployment rate at its lowest level in 50 years at 3.5%, indicating near or full employment. There also remains a mismatch between available jobs and the skills and experience of the remaining unemployed.
Re/up-skilling staff for a digitised future is also recognised as a crucial priority, considering the rapid evolution of the commercial world, further accelerated by the transformative impact of the coronavirus pandemic. Australia’s recent Federal budget, which is helping fund a 15% pay increase for aged care workers, will keep the lights on for retirement living.
Cyber security
Cyber risks remain a major concern, with the understanding that data breaches, which are on the rise in Australia, can have far-reaching consequences. The impact extends beyond hacked organisations to individuals and communities affected by compromised data security and loss of trust.
As asset managers digitise their operations and collect more data, it will be increasingly important to find technology partners who can offer robust security solutions with ISO certification. With a cloud-based asset management system like AssetFuture, data is fully protected and security patches are automatically applied.
Evolving regulations
Regulatory requirements have been increasing for most organisations, particularly around consumer data privacy and security. There are also new compliance requirements for many sectors - with asset management seeing significant changes.
Having the right asset management solution makes compliance much easier, and can turn it into a business advantage. Ultimately the higher requirements result in better maintained assets that create more value.
Agility and flexibility
Organisations need greater agility and flexibility to meet opportunities and challenges. Being able to pivot swiftly during the pandemic meant the difference between survival and failure for many businesses. With choppy waters ahead, keeping agile and flexible to market adjustments is considered more important than medium-term revenue growth.
To delve into the specifics of the Asset Management sector, tools such as AssetContinuity offer agility and flexibility in processes and people. Tasks that were traditionally high labour, resource-intense, and manual can be automated, reducing human hours and increasing speed and accuracy.
As the business environment evolves, respondents anticipate several significant changes over the next 3-5 years. This includes the increasing relevance of new technologies such as AI, machine learning, blockchain, distributed ledger technology, and quantum computing, along with the associated ethical and implementation concerns. Many of these hold exciting potential for asset management as well, such as AI-generated insights into building maintenance and management.
While some priorities have declined, such as remote work challenges and supply chain de-risking, the overall focus on digital development and operating within an environment that values transparency persists. For asset-owning organisations, transparency has become a top priority, due to new compliance requirements relating to asset registers and asset management plans.
2023 isn’t going to be an easy or very profitable year for many organisations. But slower business conditions may present an opportunity for organisational transformation projects, such as digitisation, that will put asset-owning organisations in a more competitive position as the economy gets back on track and future growth opportunities open up.
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