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MANILA, Philippines -- As Asian corporations cope with the region's financial crisis, they must avoid the temptation to trim the risk management department in any cost-cutting.

Such cuts were decried by numerous speakers at the Federation of Asia Pacific & African Risk Management Organisations' second biennial conference, held at the Peninsula Hotel in Manila Oct. 14-16.

But speakers told Asian risk managers they had to move from being simply insurance buyers to being true risk managers; that way, the speakers said, the risk managers could demonstrate their value.

Kevin W. Knight, risk management coordinator for Education Queensland in Brisbane, Australia, is the FAPARMO secretary and an honorary life member of the Assn. of Risk & Insurance Managers of Australasia. He said one reason risk management is seen as "something that can be chopped in an economic downturn" is that there is no good way to show the real cost of risk.

"We need good financial accounting systems that show the real cost of risk, including the hidden costs. . .not just the insurance costs," he said.

Levi R. Rebanal, FAPARMO president and the managing partner of the Manila law firm of Rebanal, Hernando & Rebanal, said risk management is "just a toddler" in the Philippines and needs a lot of nurturing to help it grow. But he warned that the Asian economic crisis means companies are downsizing, retrenching, merging and consolidating, and risk managers often are the casualties because the benefits of their work are long-term and not well-understood.

Risk managers have to change boardrooms' views so that risk management will be seen as a profit center and not as a cost, he said.

Mr. Rebanal said most Filipinos' attitude toward risk was nonchalance. "We are fatalistic and live dangerously; call it masochism. We smile in the face of danger and adversity; call it resilience. But these attitudes can be disastrous in business," he warned.

But Mark A. DeLillo, president of the New York-based Risk & Insurance Management Society Inc. and vp-risk management for Tampa, Fla.-based manufacturer Celotex Corp., said adversity could be positive for risk management. A tragedy had been one of the drivers of risk management for his company. Celotex's 1972 purchase of a company that had made asbestos building products resulted in it seeking a Chapter 11 bankruptcy ruling in 1990 because of the huge number of claims against it.

Mr. DeLillo said Celotex came out of bankruptcy in May of last year, having implemented a settlement trust to pay the 190,000 claimants. A more aggressive approach to loss prevention might have made the liabilities involved apparent before the purchase. "Insurance was beneficial but didn't solve our problem. We had no loss prevention policies in place at the time, but (the experience) showed that, by implementing sound risk management, we would never have to face such a tragedy again," he said.

Reg A. Bancroft, general manager (Pacific operations) for Sydney, Australia-based Royal & Sun Alliance Global Pty. Ltd., also sees long-term benefits for risk management in the Asian crisis. "Major investors coming into the region will apply more stringent corporate governance rules, changing the way companies think and behave," he said.

Mr. Bancroft predicted "a very different business landscape" in two to five years, when the "present problems" are overcome. He predicted closer shareholder scrutiny of the "construction and operation of company boards." Other countries would follow Australia's lead and make compliance a legal requirement. Australian companies must report their risk management/corporate governance strategies to the Australian Stock Exchange annually.

Mr. Bancroft said the heightened emphasis on compliance will see risk management sponsored more directly by chief executive officers. This, he said, will make for more sophistication in risk/reward evaluation models.