Suits the C-Suite

14 February 2022

Leonardo J. Matignas Jr.

The CEO as the overall risk executive

We all understand the critical role played by the Chief Executive Officer (CEO) in protecting and enhancing the company’s value, but we should consider that the CEO is also responsible for managing significant uncertainties that may become obstacles to the achievement of the company’s objectives or desired outcomes. These uncertainties are referred to as business risks. This makes the CEO the Overall Risk Executive (ORE), being technically the owner of all the critical risks of the company.With this enhanced risk management responsibility given to the CEO, it is imperative that he or she is very much familiar with the framework, principles and process of risk management, particularly enterprise risk management (ERM), which has been recommended by the Philippine Securities and Exchange Commission (SEC) in its various codes of corporate governance. ERM has also been mentioned in the guidelines for well-governed companies released by the Philippine Stock Exchange (PSE).THE RISK MANAGEMENT EXECUTIVE TEAMThe CEO as the ORE should be assisted by his executive team, usually composed of executives who are co-risk owners in the organization. This is usually referred to as their Risk Management Executive Team (RMET). In most companies, this could be the management committee or executive committee. Oftentimes, the RMET is composed of the following:• Chief Financial Officer — for financial risk;• Chief Operating Officer — for operational risk;• Chief Information Officer — for information risk;• Chief Legal Officer — for legal risk;• Compliance Officers — for regulatory risk;• Chief Innovation Officer — for new and emerging risk related to markets and competition; and• Other key executives who are critical in identifying and managing uncertaintyAnother role which is critical is that of the Chief Risk Officer (CRO) or its equivalent. The CRO is usually part of the RMET unless the board requires the CRO to functionally report to the Board Risk Oversight Committee (BROC) directly and to the CEO for administrative support (similar to that of the internal auditors). Another factor to consider is the sector to which the company belongs as there can be some regulations in the area of reporting protocols.There is a common misconception that the CRO, which should ideally be a full-time role, is the owner of all the risks in the organization. The reality is that the CRO (again in a full-time capacity) does not own any risk except for the failure of the risk management process, making the CRO the owner of this process. It is important to note that the function/process owners (i.e., CFO, CIO, CLO, among others) are actually the respective owners of the risks within their purview.The CRO’s primarily role is to make sure that all the members of the RMET, who are co-owners of the risks, are working together as a highly integrated, collaborative, cross-functional team. Let us liken the CRO to a conductor of an orchestra, whose job it is to ensure that all the different instruments and performers come together into a harmonious whole. As most of the risks are interrelated and have interdependencies, business risks should not be managed in silos to better maximize the resources needed to manage them. This also ensures that no critical risks fall between the cracks.The CRO (or its equivalent) is the face of the CEO in the risk management activities of the company. But the tone from the top is the responsibility of the CEO supported by the leadership team.THE CEO AT THE FOREFRONT OF IDENTIFYING AND MANAGING BUSINESS RISKSIn most of the board sessions that I have attended, the CRO reports to the BROC on behalf of the CEO. However, for questions on decisions made about how risks are prioritized and managed, the CEO provides his insights to the BROC and also solicits from the latter additional insights to further strengthen their risk management strategies. This emphasizes that the CEO is given the responsibility to ensure that critical risks that will significantly impact the company are identified and managed at acceptable levels.A layman’s definition of business risk is “anything that keeps management awake at night.” That is why the CEO is also referred to as the chief paranoia officer in some circles. Of course, that is just to emphasize the critical role they play in risk management.I would like to share an anecdote about a presentation I made to the board of one listed company. I showed a slide presenting the layman’s definition of business risk. The CEO immediately made a comment that he can sleep well at night. His colleagues in the board room said jokingly that this made the CEO their biggest risk, since he did not know they had risks to manage. At an event after that session, the CEO approached me and said, “You know, Leo, after your session with us, I can no longer sleep well at night.”We had a good laugh but that said it all. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.Leonardo J. Matignas is the EY ASEAN risk management leader and a business consulting partner of SGV & Co.

07 February 2022

Anna Maria Rubi B. Diaz

How can accounting relate to climate change?

There has been an increased public focus on the harmful effects of climate change, with practices and reforms continuously being developed and implemented globally to reduce its negative impact. Because of this, some industry players are taking steps to address climate change, such as utility companies focusing on renewable energy investment, financial institutions expanding their portfolios to include green bonds, and private entities investing in technologies to conserve resources.Regulators have also been taking steps to address climate change. For instance, the Philippine Securities and Exchange Commission (SEC) issued Sustainability Reporting Guidelines for Publicly Listed Companies (PLCs) in 2019 to help PLCs better assess and manage their non-financial performance across the economic, environmental, social and governance (ESG) aspects of their organizations. Similarly, the International Financial Reporting Standards (IFRS) Foundation also established the International Sustainability Standards Board (ISSB) to develop sustainability reporting standards that will provide a high-quality, comprehensive baseline of ESG information.It is to be expected that in the years to come, climate change will have an even more significant impact on the way entities do business. Because of the potential impact of climate change and the continuing drive to manage it, various entities are facing the challenge of adopting these new practices and reforms in anticipation of how they will eventually impact their financial statements.CONSIDERING CLIMATE CHANGE IN FINANCIAL STATEMENTSCurrently, there is no specific accounting standard or guidance in the Philippines that deals directly with climate change matters. However, entities are still expected by regulators and stakeholders to explain how climate change is considered in their financial statements in a way where its impact is material or significant from a qualitative perspective. They need to disclose how climate change may impact the significant assumptions, judgments and estimates used in preparing their financial statements. Entities also need to ensure that the information from the financial statements agrees with the information provided to the stakeholders and general public through publications and press releases.Given these, we cite some accounting standards that entities may revisit in preparing their financial statement in consideration of the impact of climate change.GOING CONCERNThe Philippine Accounting Standard (PAS) 1, Presentation of Financial Statements, provides that an entity shall prepare financial statements on a going concern basis unless management either intends to liquidate the entity, to cease trading or has no realistic alternative but to do so. When management is aware of material uncertainties related to events or conditions that may cast significant doubt upon the entity’s ability to continue as a going concern, the entity is required to disclose those uncertainties.Risks coming from climate change may be a source of material uncertainty to some entities due to its potential impact on their future business activities, such as bank financing restrictions. Accordingly, entities need to revisit the impact of climate change on their financial statements particularly on their judgment to continue as a going concern and related disclosures pertaining to material uncertainties.Furthermore, entities will need to consider how natural resources issues that are necessary for their operations, such as waste management, water, and energy, will affect their ability to continue as a going concern.INVENTORYAccording to PAS 2, Inventories, inventory shall be measured at the lower of cost and net realizable value. Given the developments brought by climate change, entities need to assess whether inventory has become less profitable or obsolete as the cost may not be recoverable if the inventory is damaged by climate disturbances, if it has become wholly or partially obsolete, or if selling prices have declined.PROPERTY, PLANT AND EQUIPMENTPAS 16, Property, Plant and Equipment discusses how entities should measure, recognize and disclose information on property plant and equipment. Changes in the economic and legal environment coming from the societal pressures and legislation may affect how entities measure, recognize and disclose information on property plant and equipment. This is due to the potential impacts on the useful life, residual value, designs, technology and decommissioning of property, plant and equipment.Given the uncertainty, entities need to consider how the measurement and recognition principles in accounting for the entities’ transactions, events and conditions will be impacted by these changes and how disclosures can be enhanced to allow the users of financial statements to better understand the judgments made by entities on their property, plant and equipment.IMPAIRMENT OF ASSETSPAS 36, Impairment of Assets requires an entity to assess at the end of each reporting period whether there is any indication that an asset may be impaired. If any such indication exists, the entity is required to estimate the recoverable amount of the asset. Action from governments and public awareness on climate change may drive impairment indicators.For example, a government may require entities to focus on new products and technologies that will conserve resources, potentially resulting in a significant decline in the value of the entity’s existing assets. If the public has already been consciously investing in entities with climate change initiatives, investors may withdraw their support from entities who are not concerned with such initiatives. It can also result in adverse changes to the technological environment of an entity, which may result in the obsolescence of its assets. These may also affect forward-looking information, such as cash flow projections in estimating the recoverable amount of an entity’s assets.Due to this, entities may need to consider how the impairment indicators will affect the measurement of their assets, including relevant disclosures on assumptions, judgments and estimates.PROVISIONSPAS 37, Provisions, Contingent Liabilities and Contingent Assets requires that provisions need to be recognized when: (1) an entity has a present obligation (legal or constructive) as a result of a past event; (2) it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and (3) a reliable estimate can be made of the obligation.New legal requirements and laws, decommissioning and asset retirement obligations and legal claims in response to climate change may give rise to new obligations that may lead to a potential significant impact on the recognition and measurement of provisions. Due to the significant uncertainty, entities need to consider the adequacy of the disclosures in how they incorporate climate change risks in recognizing and measuring their provisions.ASSESSING THE IMPACT OF CLIMATE CHANGEThe items cited in the foregoing are based on general accounting considerations and are not inclusive of everything that entities should consider. Since each entity’s business, operations and situation are unique, each entity will need to apply significant judgment and analysis of relevant facts and circumstances to reasonably assess the impact of climate change.As the global conversation between and among businesses, consumers and regulators grows increasingly dynamic, entities will need to proactively consider how the risks from climate change may affect not only their operations but also their financial statements. More importantly, they will also need to consider potential solutions to the climate change disruptions that are happening now and those that are emerging — before it’s too late. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.Anna Maria Rubi B. Diaz is a senior director from the Financial Accounting Advisory Services (FAAS) service line of SGV & Co

31 January 2022

Aris C. Malantic and Ronald Wong

How boards can seize the opportunity in enhanced corporate reporting

Companies are increasingly expected to broaden the quality and scope of their corporate reporting to include enhanced environmental, social and governance (ESG) disclosures. Adopting an enhanced corporate reporting approach enables an organization to articulate a unique narrative on how the business is creating long-term value for its stakeholders. Boards have both a responsibility and an opportunity to challenge their organizations to transform into sustainable businesses and redefine reporting to address the wide-ranging insights that stakeholders are looking for.To deliver enhanced reporting, companies need to think about transforming their finance operating model so that they can inject the same rigor and relevance of traditional financial reporting into ESG reporting. Boards should challenge their finance leaders to take a fresh look at how reporting is delivered by considering three key areas: data analytics, talent strategy and C-suite collaboration.LEVERAGING ADVANCED DATA ANALYTICSThe use of advanced analytics is instrumental in extracting relevant ESG insights from data. Advanced analytics can help companies structure, synthesize, interpret and derive insights from voluminous data, and create credible and useful ESG reporting. Bearing this out, the EY 2021 Eighth Global Corporate Reporting Survey, which examines the perspectives of more than 1,000 CFOs, financial controllers and other senior finance leaders globally, found that the top technology investment priority for finance leaders over the next three years is advanced and predictive analytics.Yet even as finance teams seek to build a more agile financial planning and analysis approach, several data challenges stand in the way. These include the sheer volume of external data, followed closely by data quality and comparability issues, according to the abovementioned survey. Boards should assess if finance leaders have adequate resources and budgets to address these challenges and increase their use of advanced data analytics to deliver more robust reporting.A key way to leverage data analytics to enhance the quality of reporting is to introduce forward-looking insights, for example, by bringing in external data to corroborate and provide analysis on future trends. Thereafter, this downstream reporting outcome can be used to streamline upstream activities, such as capturing data in the right format to allow for efficient collection and analysis. This requires proper planning from data collection to reporting, with technology as a key enabler. Hence, this process should be considered part of an organization’s digital transformation journey.FUTUREPROOFING FINANCE TALENTWith accelerated technology adoption, technology and data skills will become crucial for finance teams. Indeed, survey respondents identified understanding of advanced technologies and data analytics as the top two skills respectively that will be important for finance professionals to succeed in their roles over the next three years.To make enhanced reporting a reality, the board should mandate the management to define a talent strategy that equips the finance team with the right skills for the future. This includes hiring of talent with essential specialist skills like artificial intelligence knowledge and experience as well as upskilling the current finance workforce.To future-proof the existing finance workforce, boards can challenge finance leaders to rethink their talent strategy and build an investment case for a major upskilling exercise. They should also assess whether the finance leaders have taken key actions, such as performing a gap assessment of current staff skill sets and creating incentives to encourage existing finance staff to pick up new skills.Closing the technology adoption gap between the younger and mature workforce is important for driving the right culture. The senior leadership can empower the younger workforce to champion new ideas on leveraging technology through work improvement initiatives and reward successful initiatives by following through on implementation, with its support.COLLABORATING ACROSS THE BUSINESSA significant amount of ESG data is owned by different parts of the business, making it an imperative to collaborate across the different functions. In this regard, CFOs play a pivotal role in advancing the ESG agenda and sustainability performance among their C-suite peers to drive a cohesive ESG approach. For instance, finance leaders should work with sustainability leaders and supply chain executives on environmental performance to understand more about how the company utilizes natural resources and the effect of its activities on the environment. Boards should direct finance leaders to proactively collaborate across the organization to drive effective ESG reporting and demonstrate the economic impact of different ESG strategies and related targets to stakeholders.Boards should also expect finance leaders to work closely with them on sustainability performance management and oversight. With their deep understanding of the regulatory and reporting standards environment, finance leaders are well-placed to lead in building trust and transparency into ESG performance.The integration of sustainability — and broader ESG factors — into the business strategy and enterprise risk management must be a board priority. In a world where stakeholder demand for reporting on nonfinancial information is growing, the board should challenge the management to redefine reporting and be prepared to disrupt the status quo. By accelerating the digitization of finance, defining a talent strategy that focuses on reskilling employees for a very different future and strengthening C-suite collaboration, companies will be well-positioned to deliver the insights expected by their stakeholders.Boards should consider the following questions:• How is the company using nonfinancial reporting to communicate how it is generating long-term value for stakeholders and does its ESG reporting meet stakeholders’ expectations?• How is the board supporting and monitoring ESG strategy development and related goals and metrics, including the identification and integration of nonfinancial key performance indicators?• How is the organization injecting rigor into nonfinancial reporting in terms of disclosure processes, controls and obtaining external assurance?• What governance, controls and ethical frameworks are in place to oversee the use of artificial intelligence and other technologies in the finance function?• What are the top skill sets needed to enable an enhanced corporate reporting approach and what are the skills gaps in the current finance team? This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the authors and do not necessarily represent the views of SGV & Co. and Ernst & Young LLP Singapore.Aris C. Malantic is a partner and the Financial Accounting Advisory Services leader of SGV & Co. and EY ASEAN. He is also a Market Group leader in SGV & Co. Ronald Wong is a partner and the Financial Accounting Advisory Services leader of Ernst & Young LLP Singapore.

24 January 2022

Roderick M. Vega

Accelerating the integrity agenda (Second Part)

(Second of two parts)The EY Global Integrity Report 2022 shows us that 97% of survey respondents — consisting of 4,762 board members, managers and employees from large organizations in a wide spectrum of industries, including financial services, government and public sector, consumer products, manufacturing, life sciences, professional services and others from 54 countries in North and South America the Far East, Western and Eastern Europe, and the Middle East, India and Africa — place a high value on corporate integrity.However, the report also shows that organizations are struggling to close the gap between reality and rhetoric. As organizations rewrite the processes for digital transformation and recalibrate how and where work is performed, they can seize an opportunity to close the gap between what they say and what they do. Integrity in business is not confined to ticking boxes in compliance and risk management; it is about securing the organization, its reputation, and its assets — all of which drive sustainable, long-term value.While the report did not include respondents from the Philippines, we believe that the insights from the report offer much food for thought for local business leaders who place great emphasis on corporate governance and integrity.The EY Global Integrity Report 2022 provides insights on accelerating the integrity agenda, and in the second part of this article, we discuss how companies can create an optimal environment that encourages integrity, and how the integrity agenda can be innovated and transformed to minimize external threats while protecting value.CREATING THE OPTIMAL ENVIRONMENT FOR INTEGRITYThe report indicates that integrity standards have dropped in the aftermath of the pandemic, with 42% of board members agreeing that unethical behavior from senior or high performers is tolerated in their organizations and 34% agreeing that it is easy to bypass business rules. At the same time, 18% of board members are willing to mislead external parties such as regulators and auditors. In addition, 15% expressed a willingness to falsify financial records, and 14% said they would offer or accept a bribe.It becomes even more imperative for employees at all levels to understand that these violations bear consequences, and in being able to report such acts without the fear of negative consequences. The report shares that too often, employees feel that reporting violations won’t trigger change, with 38% of survey respondents saying that the main reason they do not report is the concern that no action would be taken against the violator anyway.The report also highlights the gap in perceptions of board members (47%) on how easy it is to report violations, compared to the views of employees (25%).Companies must be able to create an optimal integrity environment where management and employees trust that whistleblowers are protected, and where values are shared across every level of function and seniority. In fact, the extent to which companies can protect whistleblowers in their organization should be a benchmark of their integrity culture.There must be a high degree of transparency, with a culture that has a zero tolerance of transgression. A progressive integrity agenda extends beyond opportunistic compliance, where people do something simply because it is not illegal under the law; restrictive compliance, where people are prevented by the law from doing something; and the avoidance of litigation, where people do something to avoid being sued.The pandemic showed us that when the global economy experiences a crisis, many companies depended on the rescue interventions of Government authorities and taxpayers. Companies have the responsibility of managing resources for the common good and acting ethically, as employees, shareholders, consumers and the community at large expect them to do so.INNOVATING AND TRANSFORMING THE INTEGRITY AGENDAThe accelerated reliance on digital platforms and automation raises important risks, as data systems become increasingly fundamental to the operation of a business. Issues such as data completeness, data quality and AI models that do not perform correctly are no longer only technical problems to be managed by IT colleagues. Data systems that are critical to the business require many stakeholders involved in curating and shaping these systems, addressing any challenges with urgency. This blurring of boundaries is not confined to the digitalization of business operations and transactions, either — it is also increasingly blurred by third parties such as suppliers, vendors and contractors.The report shares that the overall confidence that third parties abide by relevant regulations and laws is high at 83%. However, while 47% of board members have the highest level of confidence, only 28% of employees believe the same. The report also indicated that different roles tend to have different levels of confidence in the integrity of third-party suppliers (86% of IT departments compared to 71% of legal departments).The report shows how easily mismatches can develop between the perceptions of the board, their employees and various groups in an organization, increasing the need to close the distance between all the groups and hierarchal layers comprising an organization. By tightening the connections between its parts and functions, an organization can deepen a shared integrity culture. As companies emerge from the pandemic and start looking to fill resource gaps with third party contractors, aligning them to the integrity culture of the company will also be vital.Organizations that leverage technology to further enable risk mitigation efforts will gain greater visibility into their risk landscape and the effectiveness of their compliance program as a whole. Leaders will need to ensure that technology is an integral part of their compliance strategy to make the most of these advancements, harnessing forensic technology solutions to identify hidden risks and using benchmarking to understand outliers. With technology able to advance the integrity agenda beyond merely checking travel and entertainment expenditure lines, data will be likewise capable of increasing the transparency of all company interactions and transactions.BUILDING A CULTURE OF INTEGRITYFocusing on technology-driven and data-centric ways to monitor one’s integrity culture and build the necessary controls, insights and process allows companies to transform their compliance programs, creating long-term value. Increasing volumes of data can be utilized as an opportunity to aid in the combat against fraud, but it should be recognized that systems and processes are not the source of fraud: humans are.This means that the best compliance frameworks can be breached if a culture of doing the right thing is not established at a fundamental level, making building a strong integrity culture as important as the control environment. The report shows that while the integrity message is reaching people, the appetite for malpractice is growing. Companies must therefore continue communicating and building awareness by educating instead of training, ensuring that everyone understands the “why” of business integrity as much as they do the “what.” This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.Roderick M. Vega is a partner and the Forensic and Integrity Services leader (FIS) of SGV & Co.

17 January 2022

Roderick M. Vega

Accelerating the integrity agenda (First Part)

(First of two parts)Played out against a landscape of evolving social expectations from businesses under current conditions, corporate integrity is foundational to fostering trust among the various stakeholders in an organization. The importance of corporate integrity has also grown in the immediate aftermath of the pandemic, as revealed by the EY Global Integrity Report 2022.Conducted between June and September 2021 by global market research agency Ipsos MORI, the EY Global Integrity Report 2022 surveyed 4,762 board members, managers and employees from large organizations in a wide spectrum of industries, including financial services, government and public sector, consumer products, manufacturing, life sciences, professional services and others from 54 countries in North and South America, the Far East, Western and Eastern Europe, and the Middle East, India and Africa. The report shows that 97% of the respondents indicated that they value corporate integrity. Companies are also intensifying their reinforcement of integrity through training and communication; 37% of respondent companies now have a statement of organizational values in place, 46% are investing in integrity training, and 53% have a code of conduct in place.While the report did not include respondents from the Philippines, we believe that the insights from the report offer much food for thought for local business leaders who place great emphasis on corporate governance and integrity.Respondents are placing greater responsibilities on their corporate leaders, with as much as 68% expecting CEOs to tackle societal problems unaddressed by government and 65% saying that CEOs should be accountable to both the public and shareholders. These rising expectations have led to organizations being asked to more formally report on the non-financial aspects of their operations. These include not just philanthropic or corporate social responsibility (CSR) programs that fall outside their core businesses, but also environmental, social and governance (ESG) measures that determine how the core business impacts the community and the planet.The report also shows that organizations are struggling to close the gap between what they say and what they do. As organizations start taking steps to rebuild the economy, rewriting processes for digital transformation and recalibrating how and where work is performed, an opportunity to close the gap between reality and rhetoric presents itself. Integrity in business does not merely refer to ticking boxes in compliance and risk management; it is about securing the organization, its reputation, and its assets — all of which drive sustainable, long-term value.The EY Global Integrity Report 2022 provides insights on accelerating the integrity agenda, and in the first part of this article, we detail how companies must define and embed integrity into their culture. EMBEDDING INTEGRITY INTO THE CULTUREBecause ethical dilemmas are different for various organizations and situations, no two companies will have the same definition of integrity, nor will they utilize the same mechanisms to instill integrity into their organizations. It then becomes imperative for integrity to be a fundamental component of corporate strategy in any organization.The report reveals that only 33% of its respondents believe that integrity means behaving with ethical standards. Meanwhile, 50% define it as complying with codes of conduct, laws and regulations. Somewhat alarmingly, the results also show that of the 442 board members, 15% were more likely to falsify financial records as their employees, and 17% were more likely to ignore unethical conduct by third parties. This makes it unsurprising for 58% board members to be fairly or very concerned if their decisions were to come under public scrutiny, compared to only 37% of employees.Though it should be noted that this is only a single snapshot of board behavior, which can vary considerably by country, region and industry, the data showed a significant change in emerging markets: the propensity of board members to act unethically increased from 34% to 41% between 2020 and 2022. There are also differences in how management and staff see integrity values within their organization: 77% of board members and senior managers are confident that employees within their organizations can report wrongful acts without fearing negative consequences, yet 20% of employees disagree with this. This year’s report even revealed a drop in survey respondents who reported misconduct, from 23% in 2020 to 19% in 2022.A large majority of surveyed companies at 93% also have codes of conduct, with a mix of training and whistleblowing policies in place. However, even though 59% of the respondents say that they do have “training for employees,” 15% of those employees are either unaware that these measures exist or claim that they do not exist. This shows that although organizations are investing in more training and communication programs to instill integrity, the messaging may not be effective. Though 60% of board members say that their organization frequently communicated about the importance of integrity within the past 18 months, only 30% of employees remember these communications.These findings reveal the danger that organizations are relegating their integrity agenda to box-ticking without giving real attention to deepening their integrity culture, which rests on actual behavior and organizational intent.The pandemic has only increased the challenge as well, with 54% of board members saying that the pandemic is making it more difficult to conduct business with integrity. Disruptions have added to the challenge of corporate survival, while increased digitization, which moved more of a company’s operations to the cloud, has further tested risk management processes. The risk landscape itself has become more disrupted, with another report, the EY Global Board Risk Survey 2021, saying that 87% of more than 500 board directors around the world think that market disruptions are now more frequent, while 83% say they are more impactful. The 2021 EY Global Information Security Survey also found that many businesses have sidestepped cybersecurity processes to facilitate flexible and remote working in the wake of COVID-19.Because of an increased focus on surviving the disruptions and uncertainty caused by the pandemic, companies have let go of non-essential activities — possibly including integrity agenda. Leaders will have to rethink of procedures for a post-pandemic era with a pivot to full digitization and a distributed workforce.In the second part of this two-part article, we will discuss how companies can create an optimal environment that encourages integrity, and how the integrity agenda can be innovated and transformed to minimize external threats while protecting value. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.Roderick M. Vega is a partner and the Forensic and Integrity Services leader (FIS) of SGV & Co.

10 January 2022

Smith C. Lim

Accelerating growth in the post-pandemic world

As the pandemic continues to impact businesses across global economies, it has also fueled a reset in strategy for many organizations who now place focus on thriving instead of merely surviving. More than half of the respondents surveyed in the latest EY Global Capital Confidence Barometer, which gathered insights from more than 2,400 C-Suite executives globally, even expect a recovery in profitability that matches pre-pandemic levels by 2022. Most of these executives share satisfaction with their performance in response to the pandemic in comparison to their competitors, with more than half of the Southeast Asian respondents (which include Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam) believing that their organizations outperformed their competitors in engaging with local communities, operational stability, and digital performance.However, this progress does not change the reality that disruption will continue at an accelerated pace not seen before the pandemic. Startups are rewriting the rules of the game, challenging business models in all industries as products and services enter markets much faster.This makes it imperative for companies to continuously review how they can future-proof their strategy and business fundamentals. They must also critically review their portfolio to determine if it will remain relevant and profitable in the long term. A constant strategic and portfolio review process will allow companies to identify areas of growth at the earliest opportunity, as well as more quickly address areas of underperformance. To take advantage of opportunities to drive transformation for success beyond the crisis, executives will need to make bold moves and act with urgency.DIVESTING UNDERPERFORMING ASSETSThe act of divesting distressed and underperforming assets is a conventional trend during a crisis — and it should also be expected to continue beyond the pandemic. It should be noted, however, that if it does not fit with an organization’s strategy, then even a strong-performing business might be tying down capital that can be better deployed in investments that deliver higher impact.While business unit management bias is understandable, it can obscure the holistic view of the business that the review process should yield. Top-down assessments by the management and board can sometimes conflict with a bottom-up review process, especially when it comes to assessing synergies and the value of business units as stand-alone entities or potential divestitures. Companies will need to consider their divestiture by identifying assets at the risk of disruption as well as those that are facing future growth challenges.MAKING TRANSFORMATIVE, STRATEGIC ACQUISITIONSThe survey revealed that over half of the Southeast Asian respondents at 56% seek to actively pursue mergers and acquisitions (M&A) in the next 12 months. This beats the average of 44% in the previous 11 years, and has been the highest number since 2012. Some of the drivers that increased this appetite for M&A include issues relating to regulations, the strengthening of technology, tariffs and trade flows, talent and new capabilities, and growth into adjacent business sectors or activities.Most of the deals that survey respondents intend to pursue this year target the acquisition of specific capabilities as well as bolt-on deals, where smaller companies are acquired and added to an existing business. Many Southeast Asian corporate M&A deals tend to have bolt-on characteristics due to them being easier to execute. However, it remains to be seen if these smaller acquisitions will be sufficient for companies seeking growth in an environment that may look very different in the wake of the pandemic. Some companies also attempted roll ups, which consolidates multiple small companies so that the resulting larger entity can take advantage of economies of scale, but it should be noted that these transactions hold a much greater risk and a higher degree of difficulty to execute.The success of the M&A approach depends on several factors. This includes ensuring that the acquisition is part of the business strategy, adequately considering and mitigating transaction risks, having a deep and well-structured analysis of the market and target, and securing correct financing of the acquisition. The extent of a detailed value-creation thesis with proper ownership and implementation actions will also make a difference between success and failure.SUSTAINABILITY AS A CORE CONSIDERATIONManagement and the board will also need to be strong stewards of the community as companies acquire and grow, making environmental, social and governance (ESG) considerations an important component of the corporate acquisition playbook.Companies will need to update their ESG and acquisition frameworks to reflect various topics, with examples that include sustainable practices, environmental compliance, and operating with integrity from the perspective of all stakeholders.TRANSFORMING AND TRANSACTING TO EMERGE STRONGERIt has been established that companies capable of transforming and transacting in previous crises have emerged stronger than their competitors. This means that embracing transformation accelerated by the right acquisitions will be key now and beyond the pandemic.In this time of rapid disruption, boards must ask themselves whether their business strategy helps maintain market leadership and growth, and if their current portfolio strategy is sound or needs to be reshaped through divestments and investments. By taking advantage of the right M&A opportunities, organization will be able to drive long-term success beyond the COVID-19 crisis. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.Smith C. Lim is a strategy and transactions partner of SGV & Co.

03 January 2022

Wilson P. Tan

Transformative Leadership in the year of recovery

For many business leaders, the beginning of this new year will be a time to reflect on the lessons of the past two years and to resolve to take steps to improve their respective organizations. If the global pandemic has taught us anything, it is the need to ensure that our enterprises are strong enough to survive major upheavals and agile enough to adapt and evolve into healthier ones primed for future success.This is where “future-back” thinking becomes useful. Future-back thinking is all about having a clear purpose and a clear vision of what you want your organization to become and then working backwards and planning for the steps and strategies that will lead to that vision and help make it a reality. It’s strategizing for the transformation of your business as it moves toward reaching its potential.This thinking is even more critical for large, established enterprises, where transformation happens much more slowly and is likely to meet resistance. Every business needs to transform in order to thrive because change and disruption are inevitable.This becomes even more critical given the encouraging signs of recovery we are beginning to see in our country and economy. While there is a sense of cautious optimism and rising hope that the worst is behind us, leaders understand that obstacles will still arise. However, they also know that there can be no true success without challenges to overcome.Given the exigencies of our times and the challenges to come in what we all hope will be the year of recovery, we believe that the need for transformative leadership becomes even more urgent and important than ever. Transformative leadership is a framework that focuses on three value-driving pillars: people, technology, and innovation.HUMANS@CENTERAuthor and leadership guru Simon Sinek once said, “Business is about people. If you don’t know people, you don’t know business.” Your business would not exist without people, especially the two most important ones: your customers or clients and your employees. Your strategies and long-term vision should have them both at their center. Every decision, every technology implementation, and every product and service must be viewed through the human lens.Understanding your customer or client is paramount in delivering products and services that will delight them and create compelling value propositions. This is at the core of business success, but it is also critical to recognize the need to adapt to your audience constantly. As society shifts and trends emerge, having the pulse of your base and having a solid understanding of where they are going is essential for planning for the future.Meanwhile, understanding your own people is just as important. They are more motivated to perform when they see that leadership values them and sees them as humans with real needs instead of replaceable workers. Enacting organizational transformation becomes easier when we always consider the impact on our people and act accordingly. One such transformation that is necessary for businesses to be future-proof but has a high impact on people’s everyday work is new technology implementation.TECHNOLOGY@SPEEDTechnology can be a great disruptor, but it can also be a great equalizer. Nowadays, technology is a necessity for businesses to be competitive, and because markets can shift quickly and dramatically, rapid technology adoption is an important step that allows your organization to continue creating value for and meeting the ever-evolving needs of customers and clients.However, as we continue to move forward into a very interconnected world, the issue of trust becomes that much more important as well. Information security and integrity are now at the forefront of conversations regarding technology in business. Speedy implementation without enough attention given to safeguards means taking on undue risk. The balancing act between ease of access and security will need vigilance and constant adjustment.Internally, successfully leveraging and implementing technology requires upskilling and/or reskilling your people. One of the common causes of resistance to this kind of change is the need to learn new things which can be disruptive and gets in the way of people getting their work done.I am sure that many readers are old enough to remember businesses having to drag their operations kicking and screaming into the internet age. However, as technology never stops evolving, so should we never stop thinking of how we can make it work for us and make us better. As leaders, technology transformation for your organization can be very tricky and will need you to be patient, understanding, encouraging, and communicative. This is part of making sure your business adopts a culture of growth and innovation.INNOVATION@SCALEFor an organization to continuously thrive into the future despite shifts and disruptions, it must have a mindset of impatience and dissatisfaction, and a willingness or even an ardent desire to always seek new and better ways to operate and deliver what customers and clients need.On the human side of this, leaders should seek to embed the transformative mindset into company culture. Make it intrinsic in how people think and operate and empower them to experiment and take appropriate risks. With innovative thinking as part of company culture, strong resistance to transformation is far less likely.On the technology side, adoption and implementation should make business sense. Innovation should not be practiced simply for innovation’s sake. Thoughtfully scaling technology transformation allows you to learn and adjust as you go. In this way, the human impact is better managed and leveraging new technological capabilities is more effective.TRANSFORMING FOR THE FUTUREThe three pillars of people, technology, and innovation each are drivers that create long-term value for stakeholders. Together they comprise the transformative leadership framework that guides the necessary approach, planning, and strategies to ensure that an organization is built for the future and resilient enough to survive and thrive future disruptions — such as the Great Resignation.Anthony Klotz, a professor of Texas A&M University, proposed the concept of the Great Resignation. This idea predicts a large portion of the workforce leaving their jobs once the pandemic ends, as it is established that how work is organized and conducted will not return to how it was before the pandemic started. This makes it even more critical for leaders to adopt these value-driving pillars not just to simply retain its employees, but to even potentially bring about a potential resurgence in the constant war for talent. In essence, we believe that by applying the transformative leadership framework to their organizations, business leaders can shift their focus from worrying about the Great Resignation and instead proactively build trust and confidence in order to drive a Great Resurgence in the business. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.Wilson P. Tan is the country managing partner of SGV & Co.

27 December 2021

Cecille S. Visto

The digitalization of corporate compliance (Second Part)

Second of two partsThe first part of this article talked about the digital transformation and technology modernization roadmap of the Securities and Exchange Commission (SEC), which included the launch of various digitalization projects aimed at promoting ease of doing business and efficiently delivering government services amid the pandemic and in preparation for the transition to the so-called new normal economy.Aside from company registration discussed in the first part, there are other already rolled-out initiatives and soon-to-be-launched systems on contactless applications and compliance.ONLINE REPORTS SUBMISSIONOn March 15, the SEC launched the Online Submission Tool (OST) that allows companies to submit certain reports online in lieu of its physical lodging. The OST has since been renamed the Electronic Filing and Submission System (eFAST), which permits companies to digitally submit their Audited Financial Statements (AFS), General Information Sheet, Sworn Statement for Foundations, and General Form for Financial Statements, among other reportorial requirements.Corporate filings under eFAST are optional in 2021 but will be made mandatory in 2022 according to the SEC. When eFAST was launched this year, it also experienced some birth pains, such as system errors, downtime, and other online bugs that have affected its optimal use. Because of these, the SEC continued to accept manual filings by registrants who have encountered errors or have not yet applied for its use.We should note that an application to use eFAST needs, among others, the approval of the board of directors. Lodging is also online and the company may designate a primary filer and alternate filers who can access the system. However, there can only be one assigned filer at any given time although designation may be changed at need.With online filing, electronic signatures may be affixed on the documents, like the Independent Auditor’s Report and the Statement of Management Responsibility (SMR) required to be signed by the Chairman, Chief Executive Officer, and Chief Finance Officer, or their equivalent, and attached to the AFS. However, there are exceptions. For instance, the SMR of public or listed corporation must be signed under oath. A Notary Public will still require wet signatures on documents for notarization.The SEC also clarified that although e-signatures may be used, corporations must keep originally signed documents in their files for presentation to the Commission, if required.Previously, the SEC adopted the AFS filing schedule depending on the last digit of a company’s SEC registration number as a means of managing the deluge of filers on the deadline. This system is now supplemented by the eFAST, which helps to further manage any health risks that may arise from congestion at the Commission’s main or satellite offices. The online filing system also significantly reduces use of paper and other resources, including the administrative cost of physically filing the documents with the SEC.While the eFAST system is still undergoing continuous improvement, the SEC envisions that eventually all types of corporate filings can be accepted by the system.APPLICATIONS AND REQUESTSAll types of applications can now be filed online through electronic mail. There are designated email addresses depending on the type of application lodged with different SEC offices, such as corporate reorganization, quasi-reorganization, and equity restructuring with the Financial Analysis and Audit Division; amendment of the Articles of Incorporation or By-Laws to include increase or decrease in the authorized capital stock with the Company Registration and Monitoring Department; and registration of securities with the Securities Registration Division. The Corporate and Partnership Registration Division also accepts petitions for revocation of corporate licenses and other complaints.Requests for monitoring clearances may likewise be requested via email. Given the expected volume of requests, the SEC typically replies within a few days or, based on recent requests, more than a week at the latest. All forms to be accomplished are emailed and clear instructions, including the payment process, are provided.The filing itself is convenient but for certain types of applications, the processing time is still largely dependent on the handling SEC officer assigned to act on the submissions. Since the SEC continues to adopt alternative work arrangements, registrants have to rely on emails from assigned processors on the results of their review, including any request for additional documents. Due to the various restrictions imposed over the past months, securing appointments to follow up pending applications continues to be a challenge for registrants. This no-contact policy, coupled with the workload of SEC reviewers, may contribute to possible delays in the approval of applications and requests.COMPLIANCE REQUIREMENTSThe SEC has also adopted stricter monitoring of corporations, its stockholders, and officers to ensure compliance with Republic Act 9160 or the Anti-Money Laundering Act, as amended. It has likewise done so through the use of technology.In March 2021, the SEC required the online submission of the Beneficial Ownership Declaration (BOTD) Form, which is a mode of disclosure by nominee directors, officers, or shareholders. Under the new transparency rules laid down in Memorandum Circular No. 1, Series of 2021, these nominees must report to the SEC their principals, or the persons for whom they hold the nominal shares.The Commission has imposed penalties for any late disclosure. Interestingly, while tech-savvy stockholders found the procedure of filling up and uploading the forms and the supporting documents relatively easy to follow, foreign shareholders noted the use of only one email platform, Google Mail, to comply with the reportorial requirement.PAYMENTSAs payment for applications and penalties is a necessary part of their transactions, the Commission also introduced the Electronic System for Payments to SEC (ePAYSEC) to facilitate the settlement of registration charges, penalties, and other transaction fees. The platform allows the use of debit and credit cards, digital wallets, and other cashless payment options.While traditional payment facilities are still available, such as payment through the SEC cashier or through Landbank of the Philippines (LANDBANK), more corporations now prefer these more convenient and arguably smarter contactless settlement options.Still, proof of payment must be provided the SEC, which will trigger the processing and release of the requested documents. Similar to the eFAST system, the payment system is undergoing continuous enhancement with some enhancements already rolled out or scheduled for deployment soon.While it is certainly encouraging to see the strides the SEC has made in the digital transformation in these vital functions, it is also interesting to note that there are numerous other enhancements rolled out or scheduled for deployment soon.Among these are a central database and processing software for all the data the SEC will receive from monitored entities. In addition, an accreditation registry system for external auditors and auditing firms will soon be in place. The SEC also wants to establish an integrated complaints management system to keep its registered entities in check. New SEC units have likewise been created, including the PhilFintech Innovation Office to support financial technology innovations while strengthening consumer protection.Alan Brown in his book, Digitalizing Government: Understanding and Implementing the New Digital Business Model, could not have put it more succinctly when he said: “Digital transformation therefore requires redesign and re-engineering on every level — people, process, technology and governance.”The SEC is certainly moving in the right direction. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the author and do not necessarily represent the views of EY or SGV & Co.Cecille S. Visto is a Tax Senior Director and Senior Lead Manager of the Entity Compliance and Governance Services of SGV & Co.

20 December 2021

Cecille S. Visto

The digitalization of corporate compliance (First Part)

First of two partsThe COVID-19 pandemic has pushed government agencies to kick-start, if not step up, their digitalization programs to deliver essential services while managing health risks.For the Securities and Exchange Commission (SEC), the mandate to digitalize and adopt technology in the ways we work came with the effectivity of the Revised Corporation Code (RCC) in early 2019.The RCC replaced the almost 40-year-old Batas Pambansa 68 or the old Corporation Code. Even with the rise of digital technology at the turn of the century, it has taken nearly 20 years for the conduct of meetings through remote communication, the submission of corporate documents bearing digital signatures, and filing forms and documents through electronic mail or through a dedicated online portal to become part of the mainstream corporate compliance process.The RCC paved the way but it was COVID-19 which truly accelerated digital transformation. From the incorporation of new entities and filing of applications such as the increase in the authorized capital stock to cashless payment systems and the launch of the Online Submission Tool, the SEC has taken great strides in not just promoting the ease of doing business but also efficiently providing government services, consistent with Republic Act 11032.The SEC has gone on record to emphasize its commitment to staying the course on its digital transformation and technology modernization roadmap, with the end goal of being able to serve its stakeholders from the safety of their homes and workplaces. As the gateway to doing business in the Philippines, the SEC has said that it must continuously innovate and leverage information and communications technology (ICT) to remain “service-focused and interoperable.”This article focuses on the five ways in which the SEC has harnessed the power of technology in the areas of company registration; online reports submission; lodging of applications and requests; compliance requirements; and payments — all of which are targeted to minimize personal interactions while the virus remains a threat.Even early into the implementation of these projects, it is evident that these innovations have improved regulatory efficiency and voluntary corporate compliance of registrants. Stakeholders have the opportunity to focus on their companies’ operations more than complying with tedious requirements.COMPANY REGISTRATIONThe SEC launched the eSPARC or the Electronic Simplified Processing of Application for Registration of Company on April 19, replacing the Company Registration System (CRS), the old online platform. As of last published official count, the SEC has processed nearly 27,000 virtual business registration applications.Before the pandemic, the SEC had tested the waters of web-based registration and licensing with the CRS. While the system eliminated the cumbersome procedure of manually filling up forms, the incorporation process could still not proceed without the submission of the hard copies of documents for review of SEC examiners.With eSPARC, the incorporation process is now fully automated and needs no intervention from SEC processors at any stage, from the name verification on the proposed corporate name to the issuance of the digital Certificate of Incorporation. Those who have tried the system have found that its use significantly enhances the company registration experience.eSPARC was initially available only for the registration of One Person Corporations but this has since been expanded to include all types of domestic corporation regardless of the number of incorporators. Applications for partnerships and foreign corporations may now also be lodged using eSPARC. A subsystem, the One day Submission and E-registration of Companies (OneSEC), even allows for the registration of domestic stock corporations in as little as one day.In his latest report to the Department of Finance, SEC chairman Emilio Benito Aquino said the fastest time recorded for eSPARC processing after the payment of the registration fee is one minute and 14 seconds, while the longest time was two hours and 37 minutes.eSPARC is fairly easy to navigate provided all information and documents are complete. Many of the fields are pre-filled and the required information need only to be supplied. Among the issues that a registrant may encounter and could delay the process include failure to reserve a preferred name that is not distinguishable from a name already reserved or registered under Sec. 17 of the RCC. Under this scenario, the applicant has the option to either appeal the name rejection or apply for a different name.Another possible cause of delay, particularly in the issuance of the final certificate, is the submission of documents, which vary depending on the company type and the review of the SEC processor.However, if all the requirements lodged online are deemed in order, the SEC can issue the digital incorporation certificate, with the original to be released upon the additional presentation of the proof of payment of the assessed registration fees and the submission of originally signed, authenticated, or notarized hard copies of the documentary requirements, as applicable. The submission may be done any time within one year from the date stated in the Interim Certificate of Incorporation.Nevertheless, registrants must remain mindful of the documentation requirements. For instance, although the RCC has removed the subscribed and paid-up capital minimums under Sec. 13 of the old Corporation Code, capitalization requirements under special laws, such as the $200,000 minimum paid-in capital for foreign corporations under the Foreign Investments Act, as amended, must still be complied with. As such, there must be proof of inward remittance of the required capital by the foreign investor.Consistent with its goal of easing doing business, the SEC also accepts registration of locally-executed Articles of Incorporation (AoI) that are accompanied by a Certificate of Authentication signed by all incorporators. The AoI and the Certificate of Authentication need not be notarized; however, documents executed outside the Philippines must still be consularized or contain the Apostille Certification to be recognized by government agencies including the SEC.In the second part of this article, we will discuss the other digital transformation projects of the SEC that are positively impacting compliance and the processing of applications of registered corporations. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the author and do not necessarily represent the views of EY or SGV & Co.Cecille S. Visto is a Tax Senior Director and Senior Lead Manager of the Entity Compliance and Governance Services of SGV & Co.

13 December 2021

Faith Mariel N. Reoyan

Why insurers must adapt to meet the changing Philippine landscape under COVID-19 (Second Part)

(Second of two parts)Consumer insurance behavior and preferences are evolving due to changes wrought by the pandemic on the psychological, emotional and economic levels. While the long-term impact of COVID-19 remains tough to predict, insurers must seize the opportunity to transform and reimagine their products and services to meet changing consumer behavior and preferences that will enable sustainable growth opportunities in the new normal.The EY 2021 Global Insurance Consumer Survey reveals relevant insights about the impact of the pandemic as well as its anticipated changes to consumer insurance preferences and buying behavior. To accomplish this, consumers throughout various diverse countries in developed and emerging countries were surveyed between May and August 2021 to gather insights about the consumer insurance landscape. Moreover, the survey also highlighted how insurers can adapt in aligning solutions to cater to changing needs, helping consumers by providing a “safety net” that protects against future financial risk and uncertainty, and enabling digital channels to meet consumer demands while maintaining social distance for safety.In the first part of this article, we discussed the details of insurance consumer behavior and preferences based on financial impact, as well as consumer concerns and product preferences. The most and least impacted segments both reveal unique needs that compel insurers to adjust their products, solutions, and distribution channels to be flexible and easy to understand.In this second part, we discuss the increased shift to digital channels, and the increased prioritization of insurers with corporate social responsibility commitments.THE INCREASED SHIFT TO DIGITAL CHANNELSWith the strict and constantly changing quarantine and lockdown guidelines implemented by the Government and fears of exposure to the virus when stepping outside the home, a majority of consumer activities have shifted online. There has been an increase in consumers who similarly moved online to connect with their agents — from a low 25% before the pandemic to as high as 57% ever since the pandemic started.One key insight here is that insurance companies have the opportunity to re-examine and adjust their digital distribution and communication offerings to address these shifting consumer preferences. Taking their business to the digital space becomes a much more viable path to move forward even beyond the pandemic. This also provides a compelling opportunity for the insurance sector to devise new ways to re-engage relationships with customers through proactive communication and education regarding their products and services.However, despite an increase in online interactions, there was still some reluctance when it came to exchanging personal data. As much as 60% of the most impacted respondents stated a willingness to share personalized communication in exchange for help in meeting their savings goals while only 50% of those in the least impacted segment were willing to share similar personalized communication.These findings point towards an opportunity for insurers to consider investing in training agents to interact effectively with their customers in online spaces. This situation also provides a similar opportunity to ensure the implementation of enhanced cybersecurity protocols, data privacy policies, and the like.PRIORITIZING INSURERS WITH CSR COMMITMENTSThe survey makes it clear that both the most impacted and least impacted segments highly prefer insurance companies with CSR commitments. Of the overall respondents, 46% stated their awareness of how their insurance providers participate in CSR matters. Meanwhile, as much as 58% of the respondents use company websites to understand an insurance company’s commitment to CSR efforts.Both segments indicated that a company’s commitment to CSR initiatives, such as labor practices, income inequality and gender income inequality are important metrics that influence their purchase decision.Over 40% of the respondents from both the most impacted and least impacted groups let a brand’s CSR reputation influence their purchase decision, while an average of 37% from both groups have even chosen one brand over another based on its CSR footprint. The considerable impact of CSR commitments on the purchase decision of consumers must be considered in the insurer’s strategic customer-centric response.PAVING THE PATH FORWARD FOR INSURERSThe pandemic relates to the very objective of insurance: protecting everyone against uncertainty and unforeseen circumstances. Insurers must capitalize on the heightened awareness of the necessity of insurance caused by pandemic, as this challenging environment provides a great chance for insurers to relate more effectively to customers in managing financial risks and navigating uncertainty. Though consumer needs and preferences are evolving in the context of this pandemic, they are unlikely to revert to pre-pandemic demands.Insurers can pave the way to provide customer-centric products and solutions that would align with emerging consumer behavior and preferences. One of the ways to accomplish this is by delivering insurance products through channels that reflect the switch to digital. To remain competitive, insurers must also participate in CSR initiatives, continue to educate consumers on the value of their products and ensure that consumers can clearly comprehend their policies.While the long-term impact of the COVID-19 pandemic remains difficult to predict, insurers who can transform and reimagine their products and services to meet changing consumer behavior and preferences are more likely to find new opportunities for post-pandemic growth. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views reflected in this article are the views of the author and do not necessarily reflect the views of SGV, the global EY organization or its member firms.Faith Mariel N. Reoyan is a Senior Manager from the Consulting Service line of SGV & Co.