Meena Datwani and Lonneke van Zundert join a live panel to discuss their views on pandemic policies in compliance, workplace, regulatory affairs and security.
With COVID-19 continuing to spread globally, most Asian markets are at least six weeks ahead in terms of crisis management and alternative workplace policies. What can global businesses do to respond to the outbreak? APAC compliance and security experts share their advice and assessment on the risks ahead in this live panel discussion.
Isabel Wong – Lynk Studio Lead
- 04:18 Asia Situation Update
- 11:11 Government Response
- 17:53 Doing Work From Home Right
- 22:19 Internal Communications
- 24:51 Cyber Security & Financial Crime Threats
- 28:47 Conducting Investigations & Reporting
- 33:20 Keys to Managing COVID-19 Impacts
- 36:24 Conduct for Financials & Business
- 42:18 Investing in Technology
- 47:57 New Post Virus Model?
Kimberley Cole 0:01
This is Risky Women Radio show to connect, celebrate and champion women in risk regulation and compliance, sharing insight and perspective from the most influential members of our global Risky Women network. On the latest developments, we need to think about the challenges we should all talk more about an innovation we are most excited about governance risk and compliance. bringing together the hundreds of senior women professionals already connected with a new emerging group of leading women and men. I’m Kimberly Cole, your chief risky woman.
Isabel Wong 0:40
Welcome, everyone for joining us for this COVID-19 speakers session on what can the rest of the world learn from Asia. I’m Isabel Wong, Lynk Studio Lead and the moderator of today’s panel. Well, this speakers session is brought to you by Lynk Global and Risky Women. Lynk Global is a tech platform that connects decision makers and business leaders with the world’s greatest minds, while Risky Women is a global network that brings together women in the risk regulation and compliance space. The community also celebrates and champions women’s achievements and works in this space with its podcast and events. We have put together a powerful panel of female leaders in the finance and banking sectors today to talk to us about how Asia has been dealing with the impact of the COVID-19 pandemic as the region is currently around six to eight weeks ahead of the rest of the world in terms of dealing with the pandemic as well as the impacts brought by the virus. In this one hour session will touch on how regulators and the financial services sector has been dealing with the impacts and and the negative impacts brought by COVID-19 and whether or not there are any new trends and new regulatory models forming in the process and we will also discuss work from home policies as well as financial crimes and cybersecurity issues that have that we have seen happening during the global pandemic. Now it is with my pleasure to introduce our speakers today. They are Meena Datwani and Lonneke van Zundert. Meena is currently a senior advisor of APAC Regulatory Affairs at EY. As a seasoned banking regulator. Meena has over 35 years of experience in the Hong Kong government, as well as over 22 years as a banking regulator with the Hong Kong Monetary Authority. She later joined EY from the HKMA where she’s responsible for enforcement and anti money laundering as well as counter terrorist financing supervision. Welcome Meena. And the other speaker that who is joining us today is Lonneke. Lonneke is an extremely experienced financial crimes and security expert originally from the Netherlands. Lonneke has lived in a Since 2006. She previously worked for the Royal Marechaussee, Dutch law enforcement agency, and joined Prudential back in 2018 as the head of financial crimes for the Asia region. She also worked as the head of security and intelligence management for the Asia and Middle East regions at ABN AMRO bank. So now, without further ado, I would like to begin the conversation with a brief update on the current situation here in Asia, because obviously, in this part of the world, we are having a deja vu moment where we see the virus continues to spread globally. Well hoarding toilet paper was something that first happened in Asia, but then eventually it started happening in Australia as well as the United States while the things that we are running out in this part of the world, or at least in Hong Kong are surprisingly baking supplies. So I would like to to ask Meena and Lonneke is to financial services industry also experiencing something similar, this kind of deja vu moment? What did it look like for Asia at the start of the virus outbreak? And what were some of the initial reactions within the industry, Meena?
Meena Datwani 4:18
Thank you, Isabel, I’m so honored to be here. It’s such a joy to be able to share our experience with our compatriots across the seas in US and elsewhere. We’re very fortunate that we’re a little bit ahead of the curve, but actually, nobody’s out of the woods yet. And if you look at the Financial Times today, it is quite scary. We started with a health crisis, which has turned into an economic crisis. And now the fear is that it might become a financial crisis, so that we really have to all work together because nobody is safe, the virus knows no borders, and we just have to work together, share experience. And we’ve had several waves in Hong Kong, first the virus was pretty much the first case was discovered in January, it was around the same time as in the US. Washington, DC had its first case, also on the 21st of January, Hong Kong was the 22nd. And things were okay, in the beginning, but the government acted very quickly because of the SARS experience, and immediately implemented for the civil service, at least to work from home. And so, and encourage the industry to do the same. And they took the cue and started doing that. And so, and at the same time, there was this fear that, this would really slow down the economy and the serious implications, so the banks triggered their business continuity plans, but life went on very much as normal and people go out and the businesses weren’t that that effect in the beginning. So that was a scene in the beginning and the functions carried on quite normally. Because, for instance, they would use international firms that we deal with in EY they had their support teams in India and elsewhere and they were functioning properly, the shared service desk in India, and then the global teams were also working so they could book orders overseas. So, things were pretty much okay, until there was the second wave where we had the imported cases. And then the government really introduced all of these social distancing policies. I think this health crisis, one of the key things that the policymakers are trying to do is to flatten the curve because they know that it is a very contagious disease. And so what has it has, it’s so, unlike some of the other crises, because, those were generally health issues or financial issues, but now it’s sort of like the supply side as well as the demand side is affected because of social distancing and in the US, the lockdowns, so they’re trying to flatten the curve, so that the health system will not collapse. And to do this, economic activities had to be curbed in Hong Kong, even now we have social distancing. And we can only go out in teams of four. But the good news is it all seems to be under control, at least for the time being this week we’ve had single digit growth of the virus infection, new cases. But we’re not out of the woods because we’re only safe when the whole world has been able to combat this or we’ve developed a vaccine or there’s herd immunity, and none of that is in sight. So there are many, many concerns which we’ll be discussing later. But that was sort of like the scenario that was in the beginning and has evolved. And now the banks are just doing their best. Assessing and identifying the various risks, supporting the customers and their staff.
Isabel Wong 8:19
Mm hm, thanks, Meena, for giving us an update of the current situation from Asia. I would like to welcome Lonneke because I guess like currently, it’s it’s a very challenging time for everyone. While like, let’s say we are all trying to troubleshoot while we try to join a webinar and as well as trying to really do our job like it’s really challenging left, right and center. But then finally, Lonneke is with us and, and Lonneke, like, is there anything you would like to add in terms of when the virus outbreak first started here in Asia, what it was like for your team? And I mean, basically, what’s your take on the current situation.
Lonneke van Zundert 9:02
Good morning, Isabel. Good morning, everyone. Good evening, and thanks so much for having me. First of all, I think it took me 30 minutes to connect. So apologies. I’m not entirely sure what I have missed. Or perhaps I’m gonna duplicate everything that Meena has said but basically, I mean, Asia is a diverse region, I have a regional responsibility. And as such I have seen a wide range of responses, emotions and practices. I’m currently based in Hong Kong. And I think the first overall thoughts were, this is not good. But it’s manageable. We can do this. And we actually know how to and we started to hear about the virus end of December even so come Jan we activated our response plans. We have employee communications. We started to distribute face masks. We implemented extra cleaning measures, because all that was learned during SARS. And we had several waves. And I think the first wave the influx from China, we did pretty well and life was actually quite normal. For the team it’s, I think at least 50% of it consists of travel. And we even traveled. I mean, we took on measures, everyone was extremely vigilant and careful, but I feel that life would be able to continue because everyone was so careful. So at the moment we’re doing well, it’s clear that all the NPIs the non pharmaceutical interventions are working. We have very strong public health responses. But at the moment, it’s everything, we’re not in a formal lockdown, but there’s no travel, everyone is working from home and it’s starting to look a bit more positive again, at least for some of the countries in Asia, but we are not quite there yet.
Isabel Wong 11:11
Yeah. Even though we’ve been seeing, as Meena just mentioned, single digit confirmed cases here in Hong Kong, I think the government has still been quite cautious in terms of the regulations and measures that they are rolling out and one of the notable measures in terms of financial relief package that the Hong Kong government has rolled out. Basically, they are trying to support business owners in the city to prevent more small and medium enterprises from going bankrupt and ensure workers in Hong Kong will continue to get paid in the tough months ahead. But some workers, they argue this 18 billion US dollar relief package rolled out by the Hong Kong government does not really relieve much pressure of them, financially and it’s kind of a controversial plan here. And also just last night, Hong Kong welfare minister said in the press conference, that those who sack their employees then replace them with family members and friends to collect additional benefits could face criminal liabilities. I would like to ask Meena in terms of what’s your take on this, as well as an overview of government responses in the APAC area as well as the rest of the world that you’ve been seeing?
Meena Datwani 12:28
Thank you, Isabel. Actually, government response, there’s been three way stimulus, I think this is this the stimulus that has been poured out is unprecedented. It’s monetary, as well as physical. So the central banks in many jurisdictions have lowered interest rates to almost zero and some countries have negative interest rates. And as you said, this cheap funding for SME credit extension and funding schemes also going directly to corporates. There’s a clear message from all central banks, and that is liquidity is not going to be an issue. They’re just throwing money at this problem hoping that it’ll go away. But as I said earlier, it’s okay that you all of this goes to the businesses, it stimulates supply, you’re producing all the goods and services, but you have to have the consumers to consume them. And if they’re socially distancing themselves not going out, which fortunately, is not the case in Hong Kong, but in many, many countries, that’s the case. So the economy is not going to be picking up until really, there’s consumer confidence. And that confidence comes when the virus is under control when the policies have been relaxed. And so we don’t know when that is going to happen. But the governments in the meantime, are so concerned to ensure that employees have their jobs and still, as you mentioned, that there’s this 80 billion Hong Kong dollar package that’s gone out to a wide range of employees. And like they have in the UK, they’re paying, the Treasury is footing 80% of the paycheck for furlonged staff. In Hong Kong also, they’re giving six months pay up up to 9000 per employee for about 1.5 million employees. So that is massive. This, I mean, this is going to cause a huge deficit in the budget. But that’s not an issue for Hong Kong. Hong Kong has a massive, massive surplus of 5.5 trillions of dollars. So these things are for a rainy day. So this is one of the things and then there are other many, many reliefs, like even those helicopter money to give $10,000 to each of the Hong Kong residents so that they can go and spend, but we all want to be able to go out and spend. And then there’s the other question when the things get normal, are people really going to want to spend as much knowing what can happen would they be more inclined to save that is also a concern. So that is one aspect. So there’s the central banks and there’s Government. And then there is also the regulators and they’re really trying to pump, they’re reducing all of the buffers. And this is led by the international setting bodies like Basel Committee where all of these reforms, the Basel Three Reforms, they’re all sort of like being delayed. And in Hong Kong, HKMA also announced all of these are being deferred. Similarly in Singapore, in Australia, across Asia Pacific and the world, because the tone is set from the international bodies, setters. And then also there’s a lot of relaxation on regulatory requirements, regulatory reporting. And they’re, for instance, in the AML space is saying use a risk based approach and exercise flexibility, because they really want the banks to be a mechanism for the transmission of the financial aid. Since they are transmission mechanism, which is a real real good change because we in the Financial Services had to deal with so many other financial crisis where the banking system was the problem. Here, they’re not the problem, they are the center of the solution, which is a relief. But there is a danger that in all of that, because of the shutdown of the economy, and because of unemployment, that, when they give out all of these loans, if they don’t do proper credit risk management, that they’re going to be bankruptcies, and this is going to dent on their otherwise very, very good balance sheets, because they spent the last decade building up their balance sheets. And then there’s also, there’s one area that hasn’t really been focused by the government or the other non financial and the the other financial area, but that’s not banks, it’s the investment space where there is not as much regulation and then they’re, they’re facing massive outflows of investors in their funds, they’re selling funds. And today’s Financial Times says this is a really hot spot. And this could lead the health crisis into the economic crisis becoming a financial crisis. So there are two aspects of this. One of them is that the banks credit worthiness will go down the tubes, and then they’ll need to be rescued all over again, this is a big risk. And the other risk is really where this the investment, the hedge funds, all of these other financial services that are going to affect investors because if investors sort of dump their funds, the investment fund is not going to be affected because they keep selling, selling selling, but the investor is going to have huge losses and so they’re going to have less income, less capital. And so there there could be increasing bankruptcy. So that is a concern that we have to watch out for.
Isabel Wong 17:53
Yeah, I do agree with you as, of course like the governments and regulators. They are also struggling to try to flatten the curve while trying to strike a balance in terms of not killing the economy so much for the people. But then the other hot issue that I would like to bring now as we move on to the next section of our talk is that some of the internal policies, rolled out by companies around the world during the virus outbreak because one significant global trend, a culture, that was created during this COVID-19 outbreak is definitely the work from home practice. But it does not really come without any challenges in terms of in the Asia context, because we also have Japan’s reliance on paperwork, lack of hardware and software by some civil servants in Hong Kong. And it’s even more so for finance and compliance workers in terms of having to do their jobs from home. So I would like to bring in Lonneke, how has to work from home practice evolved over the weeks for companies in Asia and since we were at least three months into this work from home experiment in this part of the world, what’s your take on how, really, we can do it right?
Lonneke van Zundert 19:08
That’s an interesting question, Isabel because as organizations around the world find themselves in different phases of managing the impact of the virus and while the challenges may vary by location by industry, even by business maturity, I think we all have a role to play to build our organizations with resilience. And while you see defensive measures are being taken, strategic opportunities, being shaped already. Identifying the right employee policies and smart approaches to remote work, being not only one of the most important but also just not easy. We mentioned to travel already that went through different phases we have travel allowed, we have exceptional travel, we had travel with special board approval to basically non travel not only business but also personal travel. And then the decision was made, a shift to complete, remote working. A few key items to consider I think, first of all ensure that every everyone can actually work from home and they need to feel supported, have the right access to systems and technology. It is not for everyone and not every country or industry has a work from home culture. For instance, in Hong Kong, the houses are small. Sometimes multiple families live in the house I mean, people live their lives mostly outdoors so suddenly to all work from home in combination with homeschooling, because that becomes a different ballgame when schools are closed and working parents need to take care of homeschooling, it’s very challenging,. I think check ins, whether it’s on a daily, weekly, bi-daily, via video that provides direction, confidence but also resilience in the team. And for us, it works well to have team guidelines established. I mean, it’s exceptional circumstances, but especially in our area it’s important that the quality is maintained, and there’s enough oversight and control of investigations. So those are key items as well as how is productivity being impacted? Because again in our teams, a failure to provide support could lead to incidents and events not appropriately reported or breaches not identified or reported to regulators. So I would say it’s key to get it right. But it’s, it’s not an easy one. aybe to add perhaps from a personal perspective, I have developed two personal mantras – everything will pass and just be nice to yourself and others. I’m focusing on how lucky I am. And that my concerns are not bigger and I am trying to see this as a chance to reset. I think to have a positive outlook for the team, and keep up that team spirit is, is essential at this time.
Isabel Wong 22:19
Thank you for your optimism. This is a this is a much needed optimism during times like this, but then I also would like to ask you about communications, because in order for employees to feel supported, of course, companies will have to communicate security related issues also effectively in order for employees to feel protected and supported. So how can we do this in an effective manner how to educate employees about security in such challenging times?
Lonneke van Zundert 22:50
I would say we need prioritize employees’ safety first. So that is physical safety and that is their well-being. It’s also a time where employees are going remember how you as a company or as a boss as a team manager are dealing with the crisis, whether they feel the concerns were focused on the financials or that was a concern for them as an employee as a contributing staff member. So any wording and messaging is essential. Even when we talk for instance about work from home communication, there’s work from home allowed, work from home encouraged, work from home mandated and we went for all these various stages and not only do the various communication lead to a different outcome in terms of people actually working from home, it also has an impact on the motivation and commitment to the company. What are the mitigating plans and support for when staff falls ill? And when there is a positive case. Technology is proven to be a key element when we all need to work from home, it’s important to enable them to do so from an IT infrastructure perspective, but given the explosion in the use of video conference there’s also an increase of risk exposure. So a company also needs to step up their security, cyber resilience, awareness, testing, I mean, free software is free for a reason. And there’re both security and privacy concerns and people need to be aware. So internal communication on do’s and don’ts, which network to use, which device to use, password protection. And, especially in times of disruption, data security is key and measures need to be taken to mitigate data breaches to ensure privacy and confidentiality. Also, for our customers and clients.
Isabel Wong 24:51
Yeah, when when we’re talking about security, one of the things that came to our minds, of course, would be some of the other threats that was posed by COVID-19, which is cybersecurity and financial crimes related matters, and also frauds that we’ve been seeing prompted by the virus outbreak. So it’s not all positive that everyone’s social distancing and staying at home, of course, they are also more vulnerable to cyber security issues as well as fraud. So you Lonneke, you are an expert who has been working and watching this space closely. What are some of the trends and issues that you’ve been seeing recently?
Lonneke van Zundert 25:33
The one thing to remember is, criminals will do anything to make money and, and the virus presents serious challenges for all of us, including financial service providers. We need to detect and prevent financial crimes in the midst of these major disruptions. And as we know, already shared, financial regulators have globally issued guidance for better protection against these against these crimes. So a lot of the crimes that criminals initially commit are not possible because they’re locked down the other restriction, they have to resort to new ways. There are ample examples of cases that come to mind how they changed up, I was reading something about Chinese drug traffickers now got themselves into fake N95 mask and that’s just a straightforward example. Companies are facing challenges from internal fraud and cyber threats. Disruptions in the workforce are leading to less oversight of systems and operations which can leave the door open to internal systems breaches, fraudulent account activity, contract fraud, etc. Similarly, reduced oversight of cybersecurity systems makes companies more vulnerable to cyber attacks. Because everyone is working remotely, the risks have shifted more from physical risks to online risks. Again, too many to mention, but just a few of the examples that we’ve come across a lot at the moment are false identity scams, ID theft, – where advantage is taken of consumers disrupted banking routines, leaving accounts open to takeover. Because there is obviously also a lot of legitimate COVID-19 related communications from banks and employers, and there is a heightened anxiety which makes it easier for individuals and (vulnerable) customers to fall for phishing scams that are ultimately aiming for account takeover or payment frauds.. Another scam to watch out for are those related to the relief funds and the bailout packages, crowdfunding platforms, and payment fraud where counterfeit sites are falsely claiming high in demand items such as face masks or santizers. Or donations that are being solicited for non-existent COVID-19 health organizations. In the company, we did the test just to increase the awareness of the employees and it was really well set up. It was a charity, I mean, like, they were aiming for people’s empathy and sympathy. And although I I’m in this field, I know this was it was coming, but when I read the email, it was just so convincing and people want to do the right thing at the moment and they do want to help so it’s very easy for them to fall into these kinds of scams.
Isabel Wong 28:47
Yeah, in terms of scams and also security issues is it’s really a huge threat. But then the other thing, the other threat that I would like to talk about with Meena in terms of threats or or complications as well as challenges in terms of working from home would be, of course, how like teams could do compliance and risk related teams could do investigations as well as, like how they are doing their quarterly reports like, Meena, do, you have some experience and tips to share on that front?
Meena Datwani 29:20
So I’m working for EY as you know, and have a lot of contact with banks and the banks because there isn’t a lockdown in Hong Kong so we’re a little bit different from some of the other jurisdictions like America, for instance, and Canada. So there’s a rota system and the MA I was talking to this regulator a few days ago and he said that they’ve asked the banks to have clean teams and dirty teams so they mitigate the risk so they’re half the people in in the bank itself and half people working from home. And so that if there is a case of infection, that the whole team because because then they have to vacate the premises have to clean it, so that they’re doing that. So those who are in the office are very well equipped to carry on those functions. And those who are at home also are managing okay for the example that you gave about doing the audits, because the first quarter was the end of the audit period. And I have statistics here to say that the Hong Kong Institute of Certified Public Accountants said that out of the 1,792 issuers listed on the stock exchange, only five did not publish their financial data due to COVID. And, and this year, they made an exception they said that your audit statements can be sort of like with the auditor’s agreement or without, so of the balance, 314 published without, so despite the challenges, it seems that at least a Hong Kong people are very, very resilient and adaptable and for instance, EY we’ve got really, really good technology and we have VPN. But this is not the case with some industries. And there was an article in the newspaper about the government, for instance, which says that people are saying that it doesn’t work as well in government because they don’t have a VPN, which is essential to avoid phishing, to prevent phishing. But only the senior government officials have that. Whereas the middle or the frontline people, they don’t have that. And they also have these managers who are not very receptive to working from home, they don’t trust, they don’t want to use video conferencing equipment. And the policies are not clear, but in EY for instance, I attended a town hall yesterday, and it was so clear, it seems that working from home works really well and there was also a lot of sort of like comfort about don’t worry, you’re not going to lose your job and this and that. But there are certain risks, even though generally by and large, we haven’t seen these yet. But I think that some of the risks are like mis-selling risk, they’re on proper controls. And so it is really important for the frontline people to be told that they have, they can’t cut corners, that they must also meet with all the compliance, because my bitter experience during SARS was that we were inundated with the, I was in HKMA then, and because investors lost money and they’re gonna lose money in this crisis, if they haven’t already, they’re going to look for somebody to take the blame. And so there was 20,000 complaints to the regulator. And so there was a massive investigation. And then there had to be a big settlement. So we can see all of these coming. We’re talking to our clients and telling them be aware of all these risks, mis-selling risks, fraud risks, which Lonneke mentioned, and all of the others, make sure that you identify, assess and mitigate your risk. And if there’s need, seek the help of experts if necessary to mitigate these risks.
Isabel Wong 33:20
Yeah, drawing from your experience and example that you just gave about EY, of course, like transparency and effective communications are really some some of the key components in terms of supporting businesses in terms of like running smoothly and operating during this time of working from home. So which it brings me to ask you both the next question because, as you guys have mentioned, a lot of the risks and threats could be prevented if there was sufficient breach planning. But of course, it’s challenging for any businesses to be planning ahead for this COVID-19 outbreak, but then we would like to to look at the future, like what are some of the key lessons in terms of managing COVID-19 impacts that you think are worth learning? Let’s say from Asia or from this outbreak in terms of like future planning and related? Lonneke?
Lonneke van Zundert 34:20
That’s an interesting question. It’s also a difficult question. I mean COVID-19 is reshaping the global economy and also geopolitical landscape. And for many countries, the response to the virus is now well advanced and the question of what comes next is receiving more attention. But we may not be able to return back to the normal as we knew it. If we go back to the topic of fraud and scams it comes down to opportunity and motivation and rationale. Agents that are selling products now not only have more opportunities because of lesser oversight controls, manpower, perhaps also our technologies or screening, monitoring scripts that needs to be updated based on the new situation. But there’s also going to be a lot of pressure on the money side, I mean, it’s a commission based industry and it’s when it comes to quarter ends or any, any target period over which commission’s are being paid some feel pressurized to do anything to make sure they meet their targets. So they’re just being squeezed and more opportunity, more motivation. So it’s, it becomes very challenging to address that effectively. What I learned when I was still working for government, is that it is key in these matters is the cooperation with the regulator, with law enforcement, with the industry as a whole to jointly tackle the issues that that we see. And so looking ahead, yes, I am a very positive person, but we’re gonna have a hell of a job to do in the next month and year to come. I mean, the biggest risk at the moment is still managing the disruption. And then the working from home the technology part the security has shifted as I already said. We’re now using Zoom, the whole world is on this, and there many concerns attached to it. So it’s a challenge, I would say.
Isabel Wong 36:54
Yeah, I would also like to bring up let’s say in terms of for businesses, of course they are desperate in terms of doing sales, as well as keeping their business performance up. In terms of how they could mitigate through this challenge, I mean, navigate through this challenging times. And in terms of doing sales, as well as perhaps even coming up with some insurance policies for the employees, like, do you ladies have any comments on this part?
Meena Datwani 37:26
Um, I think my background and my knowledge is with the banks, but it applies equally to businesses. And I think the key buzzword now is operational resilience. So look at your business from end to end, make sure that all of your critical functions and systems can function in a crisis, this crisis, and then do stress testing. But I think this crisis has stretched all the stress testing and right now everybody is firefighting. So, as I said, compliance might be stretched, corners might be cut. But you know, at some stage one has to look at the whole enterprise, look at all the risks, like, in that placemat that I had earlier that slide one, and look at where the weak links are and where controls need to be strengthened. And that goes for business as well. But in the meantime, do everything to support your employees and your customers. Because they’re the key to success. Like I said, we need, you need your employees to help you manufacture goods, and you need them to provide services, and you need the consumers to go out there and spend. So you really need to look after both, then to support for there to be any recovery. And of course, all of that is dependent on the social context whether this lockdown can be in some of the countries can be relaxed. As I said, Hong Kong is looking good. But Singapore was looking very good a few days a few weeks ago or a week ago, and suddenly there was a spike. So there is no room for complacency. And we’re concerned that there might be a third wave in Hong Kong as the people in China have gone back to work. And then there could be a spread there, which could come that could be a contagion in Hong Kong because Hong Kong is part of China. And although the government has shut down the border and over overseas visitors aren’t allowed, China we’re part of China so there’s goods and services, all our food is from China and this is coming through every day and so the border is still pretty fluid and there is that really, really strong risk.
Isabel Wong 39:42
Yeah, and also, in terms of making sales of course, during this time, as companies are more desperate, I would also like to get your comments and opinions in terms of like, how companies can maintain integrity whenever they are doing sales in terms of low ethics and conduct of sales agents.
Meena Datwani 40:03
I think that particularly the financial firms, banks in particular, they have really strict conduct rules and investor protection is a key key principle, under no crisis is investor protection to be compromised because it will come to haunt you, the regulators are going to take enforcement action against you, so you won’t be spared. And even when it comes to financial crime, the FATF have has made a statement saying that in these circumstances when there’s rise in criminal activities, that supervision and enforcement is becoming really important to send the right message, the deterrents effect. So I think that people, a lot of sales are moving online and there’s even greater chance of mis-selling using online because of so many scams, false description, and then even like masks that are sent to the US now or some of the other countries that are coming back because they’re poor quality. So I think that businesses really have to be ethical and culture is really important. The MA embarked on a bank culture reform. This was in 2018. And they said that governance is so important and that you have to have the incentive systems. Because if you, if you sort of incentivize your customers based on sales targets, they’re going to break corners, they’re going to go and sell no matter what, just to get the figures up, particularly in these times when jobs are under threat, because there will be huge unemployment. So it is so important to have the right culture to say no matter what we’re not compromising the customer’s interests and to have the customer centric culture and then to have escalation of misbehavior, whistleblowing. So all of these things have to be in place. For banks in particular, because they get money from the public they’re, they’re, our fiduciaries, they keep our monies. And and so maybe everybody has a bank account or two. So, yeah, and the same goes for businesses – ethics and culture is so important.
Isabel Wong 42:18
Yeah, I agree with you Meena, of course, um, in terms of building a culture, it takes time. And then it is something that businesses should really well, they should already have a positive culture in place, and also ethics conduct regulations in place, but then, of course, it will also go further into any future preparation for future crisis. But then in terms of preparation, there’s another aspect that I would like to bring up, which would be the security side of things because, obviously, currently, the companies that are doing a little bit better in terms of mitigating the risks brought by COVID-19 would be those that are a bit more tech savvy, as they have the advantage in terms of of having invested in better technology, technological implementation as well as protecting the employees security a little bit better. So this question is for you Lonneke like is it really time for companies around the world to start investing in better tools and information security solutions to prepare for future crisis if they haven’t already done so?
Lonneke van Zundert 43:24
I was about to say I think if they have to start investing now they are already late in the game. But yes, absolutely. I mean, everyone is working from home and as Meena said, resilience is key. Now in order to be able to show that resilience and continue your business dealings, you need to have the technology in place otherwise, as I said, for our regional teams a lot depends on travel. I mean, now there’s no travel, how are we going to conduct an investigation, how we do a review, how our audits being conducted? Without the necessary technology, we can’t even start doing that. I mean, it’s challenging enough as it is to do it from a distance. So yes, absolutely. Technology is key, together with the messaging on the data privacy, and the security risks involved. Because if we suddenly have a whole workforce, using technology, a technology that they haven’t used before without the clear guidance, and the security being stepped up by the companies it’s going to create even more problems. So yes, those that are going to come out relatively better than others are probably companies that have invested a lot in technology and the security that goes with it.. And one other comment that I wanted to make on that sales practice, which is very interesting, and because I worked for both a bank and a an insurance company is an agency force that is using the platform to sell our products, but not necessarily employees. So to make sure that those people that work on a commission basis, actually maintain the values and the integrity that you as a company stand for that you want for your business. And I think one of the very few things that we can do, especially as demand from clients is going to pick up is I mean, we can tailor our products we can restructure our products with regards to premiums we charge, the way customers can claim and also the commission structure that we set up for the agents I mean, as long as a company is pushing for hard sales, especially in this time, you know that problems are going to come your way. So I think the company has a really big role to play. And it goes back to one of the very first comments I made. This is the time that a company has to choose on what they want to be, like, how do they want to get through this crisis, what is the main purpose – employees and clients first, then financial. If they have the opportunity to make that kind of decisions, obviously, because it’s not as easy for some as it may be for others. But yes, to go back to your question, technology is key, together with strict guidelines, controls and security.
Isabel Wong 46:36
Yeah. Yes, Meena?
Meena Datwani 46:38
Can I just supplement that the FATF also says that you have to use technology. We know that criminals use technology particularly so I’m thinking more on the AML CFT space. And so, if you want to be ahead of the criminals, you have to use technology and so do the regulators. So FATF have said that fintech is really important fintech solutions. And then there’s a called regtech, regtech is where you do regulatory technology, you use technology to report to the and communicate with the regulators. And then there is suptech where the supervision of the regulators is also using technology. So I think that the suptech is, it’s just starting to take off the MA has put that on hold because of the crisis, but it is so essential that the regulators are also up to speed in the use of technology. And then the interface between the regulators and the industry, the financial services industry has to be also supported by regtech. And then fintech is quite advanced. But yeah, so it’s really important particularly when you’re working from home, and if you don’t have the help of technology, you would have gone under by now.
Isabel Wong 47:57
Yeah, that’s a that’s a really good tip. So I would like to quickly also talk about the world of post COVID-19. Because of course, even though we are in the crisis, currently, but then it’s also good for us to think ahead for a little bit of future planning for when things are going back to normal, some say a new world or new order is going to be formed after this Corona virus outbreak but then some say it’s not go in I mean, business are just going to go back to normal how they used to be. So what, what’s your take on this? And whether or not it’s going to have a new reality, let’s say in the form of a new regulatory model, somehow?
Meena Datwani 48:39
We know that the risks are evolving, and so, the regulator always has to deal with those risks. And I alluded earlier to the risks of the non-banking sector. That is really not very well regulated and we are feeling and so is the IMF and the World Bank that that is a hot spot for for problems and that that is going to call drag this down this time. So I think that there’s going to be greater focus on that, that area and instilling the same regulation, the capital requirements, whatnot, and the liquidity, so that that doesn’t drag us down. So that’s one big area. And I think that the regulators are going to look more and more at, as I mentioned earlier, operational resilience, because that covers everything from from one end to another. And so they’ll be also doing more stress testing, but this has all been suspended at the moment, and then the stress tests thresholds are going to get more and more ridiculous because we saw how ridiculous it can get, the stock market collapse within one week 30% I mean, nobody imagined that and bonds, treasuries, which were safe havens also collapsed. I mean, it was just mind boggling what happened and could happen again, who knows, you know, we’re not out of the woods yet. And the forecast is all very grim, the world output will drop by 5% across all, the advanced economies are going to drop 6.5%. The only two economies that are will will be in the positive territory, according to the report today will be India and China. It’s just grim. But, but you never know, we all are determined to make this work. But many people are not expecting a V shaped recovery and that it’s going to be a long tail.
Isabel Wong 50:42
Yeah, I mean, it is indeed a very grim outlook, as you just mentioned, but of course, our other speaker in your house Lonneke, she’s a little bit more optimistic. So Lonneke to you thank the new reality would be a positive one and is there any new real reality to be looking forward to?
Lonneke van Zundert 51:02
I do agree with Meena on this, the outlook is grim and there won’t be a return to the old normal. There is just no way something like this can happen without creating a new or next normal. So while it’s grim, I also think that this is the time to reset and as a company also reassess how you currently operate including our functions review our working practices, productivity, quality, consistency. I mean, the use of technology solutions has accelerated and decisions were made, related to digital and personal privacy, basically, because we had to make the decisions to make this work. I mean, we’re having a tracking app in in Hong Kong where if you’re being tested or close to someone that was confirmed positive that you know exactly where that person will go, has been. We are talking in the Netherlands on a similar app, that would not have even been possible like three months ago, there’s no way people would have considered that. So I think this, crisis has accelerated these discussions for the right or wrong, but it’s a reset and also good things to come from it. I think it will have an impact on, I don’t know if it’s nationalization, perhaps regionalization where we are living in such a global world, I think people are taking a step back and, diversifying, a lot of the concerns also come from a heavy over reliance on one supplier, or one vendor. I think people are spreading the risks accordingly, because this is not something that people could have imagined, like six months ago, and it did happen. So a reset, a bit more of a realistic outlook perhaps and lots of reassessment and readjustment.
Isabel Wong 53:05
Yeah, I do agree with you in terms of the reliance on, let’s say, a certain country for manufacturing and stuff like that, because in terms of the global economy there’s currently a new trend that might be forming, it’s that different economies and regional markets are having this kind of decoupling or kind of like a de-globalization trends being formed. So it is, indeed a new reality that no one is really stressing about what it’s going to look like. But since as our session is coming to an end soon, I would like to quickly squeeze in one question that came through our email by our audience for you both. Which this is an interesting question because it’s about work from home. It’s asking that would you say work from home policies make compliance simpler, or more complicated?
Meena Datwani 53:56
Definitely more complicated. For sure. Because there isn’t that proper supervision no matter how hard you try, but it’s not impossible. And I think that the the compliance officers are doing their best. And particularly when you have split teams, you have better support. And with greater use of technology, there’s also greater support. I just also wanted to add a comment on what you just said Isabel, I know that there’s a lot of rivalry between US and China, and that everybody’s looking, shutting borders and all of that, but I think that one of the lessons that can be learned from this crisis is that we’re really one country, the world is one and that we’re all citizens of this big world, and that we really need to work together to solve these unprecedented crisis in this unprecedented crisis in these global issues. Because the virus knows no border. Likewise, we should know no borders when it comes to cooperation. And it’s so good to be able to talk across to our friends in the US and Canada. To hear from them at some stage when they’re ahead of the curve.
Isabel Wong 55:17
Yeah, I mean, it’s good to have some of the audience from the north from North America joining us today for this conversation. The other question we would like to go through quickly that came through our q&a. chat room is Do you guys see government and companies also individuals learning from this crisis to force maybe a more responsible and sustainable recalibration of business as usual when things are finally back to normal?
Lonneke van Zundert 55:49
I think it’s both ways. I mean, I mean, there’s good and bad in this world. And I see lots of positive developments, as I said, there’s a reset, there’s a sense of purpose, you see, on one hand people taking the opportunity to do the right thing and focusing on clients and employees to basically facilitate the well-being of all of them and beautiful things are happening. While on the other hand, I see horrible things happening. I see the worst of capitalism and people are being squeezed. We were talking about sales pressure. It’s, I mean, it’s not a simple answer. I think both and I do hope that this reset this reassessment in in each and every area of life, personal life, work life, company vision, mission. I hope the good will prevail being a positive person, but I think it will be both.
Isabel Wong 56:58
Yeah, indeed. Yeah, Meena, do you have something to add?
Meena Datwani 57:03
In this area I think that there’ll be a greater focus on on environment and climate change and all of those risks that are new and emerging. That the regulators have been pushing. I know the HKMA is pushing that a lot. And so also the international bodies, standard setting bodies. So I feel yes, there will be a more responsible and more sustainable collaboration of business as usual. I’m positive about that, myself.
Isabel Wong 57:34
It’s great to end this panel on a pretty positive note despite the grim outlook that we did talk about. Thank you very much for your time Lonneke and Meena for joining us for this discussion. And that concludes today’s COVID-19 speaker session. Thank you all again for joining us. We’ll be sending the presentation deck as well as a transcript from this web panel to you through email very soon. And meanwhile, the webinar and the audio version of this webinar will be available on Risky Women as well as link global later. Do stay tuned for more upcoming events and COVID-19 content on Lynk and Risky Women’s social media channels. We are on LinkedIn, Facebook, Twitter, and Instagram. Thank you very much. We will see you very soon.
Kimberley Cole 58:18
Thank you for listening to this exciting episode of Risky Women Radio to connect, champion and celebrate women in risk regulation and compliance. I’m Kimberly Cole, based in Hong Kong. For more information on the Risky Women global network, head to our website and the Episode Notes and please be part of the ongoing conversation by subscribing to this podcast, connecting with us and Risky Women on Twitter, or even reaching out to me directly by email.
Kimberley Cole 58:53
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