ASB Thought Leadership – Page 2 – Asia School of Business

As our population continues to age, it’s important to think about the future of healthcare. Especially after our experiences with the COVID-19 pandemic, and the realization that there is a need to migrate from the current face-to-face channels to new norms brought about by digital transformation. The recent Recovery & Growth session organized by Asia School of Business’ Career Development Office convinced me that a major shift needs to happen in healthcare.

The session featured insightful sharing from two outstanding leaders in the healthcare industry – Nadia Wan, Group CEO of the Thomson Hospital Kota Damansara and Azran Osman-Rani, CEO and co-founder of Naluri – on the future of healthcare. I believe moving towards a proactive, multidisciplinary, and outcome-based landscape could aid in increasing the effectiveness of the healthcare system while providing higher value service to patients.

Data Analysis: The Base Line of a Proactive Health Care System

The healthcare system today is largely reactive, and primarily revolves around a transactional, cure-based model. It isn’t necessarily directed at making people healthier or improving the quality of life, but instead merely attempts to tackle situations where patients encounter adverse physical or mental health conditions.

The system should be working towards identifying and predicting illness before anything untoward happens, and as such there is a clear need for a more proactive system, radically different from what we have grown accustomed to regarding healthcare.

So how do we go about doing this? According to Nadia, apart from their requisite medical skills, healthcare professionals should also be trained to work with data sets, cultivating the ability to read digital dashboards so that they will be able to plan patient care more effectively.

By planning based on reliable data, the general healthcare system can become more effective in allocating resources, more cost efficient. and of course, deliver safer, higher quality care. The accumulation of valuable and revealing data sets must be performed in real time, ideally through automated means and driven by artificial intelligence or machine learning technology.

Additionally, the inconsistency in the standard of service and care derived from manual processes should be avoided. By doing this, we will be able to make great strides in preventive healthcare, which could potentially enable humans to live longer, and healthier.

The Shape of Change: Tomorrow’s Health Care Professionals and Patients

Multispecialty group practices have been common in the industry for several decades. The reality, however, is that current health teams still mostly work in silos. Meanwhile, the existing healthcare system has effectively disintegrated, and is neither able to connect the different stakeholders within the value chain nor place patients at the centre of care.

Unfortunately, no real effort has been put towards creating an integrated system where all healthcare professionals are able to interconnect, allowing for the accessing of patient medical records on a single platform. In an ideal world, healthcare providers would be able to, for instance, understand and analyse the possible connections between the prescriptions by a psychologist, and that of a gastroenterologist.

Additionally, one important point that should be highlighted is that the concept of healthcare professionals needs to expand beyond conventional stakeholders such as doctors, nurses or practitioners who generally address patients’ episodic health conditions and manage their chronic illnesses. In fact, healthcare teams should include professionals with diverse skillsets, including expertise in data analysis, marketing and above all, technology.

As Azran succinctly puts it. “Companies that outsource technology services are doomed to extinction.” The key takeaway of this is that healthcare teams should embrace a multidisciplinary focus while placing patients as the central variable within the health system equation. Essentially, the healthcare system of the future needs to be more customer-centric instead of relegating patients to a secondary element.

Result-Based Services for All

The primary goal of the healthcare system should be to provide healthcare access to everyone, thereby ensuring the wellbeing of humanity. However, the current system is constrained when it comes to providing innovative new treatments and suffers from lack of focus on quality outcomes. To overcome these limitations, governments and relevant stakeholders need to consider the creation of a new form of primary care that will prioritize end users and encourage direct involvement from doctors.

As an example, most healthcare providers currently focus on clinical outcomes based on survival rates. However, most patients also consider other factors that are equally important to survival, such as post-illness recovery care and mental health. The analysis of a broader spectrum of outcomes would help to provide better insight for both patients and healthcare providers.

Furthermore, it will also support shared decision-making regarding the patient’s treatment; for instance, the decision to not treat a patient can sometimes be a viable option. As such, governments need to move towards creating policies based on the interaction between patients and healthcare providers to ensure that shared decisions such as these will be the best fit for an individual patient rather than the rest of the stakeholders.

Conclusion

There are many different perspectives to consider when trying to change the future landscape of healthcare. Influential parties such as hospital management teams, healthcare providers and the government need to work together to combine resources while creating a diverse community that promotes innovation and transformation for better wellbeing.

Personally, I believe that the ideal scenario is being able to gather all relevant healthcare leaders and integrate their creative ideas into shaping the future of the industry while deploying their considerable leadership skills to drive the change. Most importantly, everyone that is directly or indirectly a part of the system – including patients, providers, engineers, designers, regulators, and industry associations – needs to play a part in shaping the future of healthcare.

Note: Full essay reproduced by permission of the author

Book V of the Wealth of Nations, ‘Of the Revenue of the Sovereign or Commonwealth’ concludes Smith’s magnum opus. Having criticised the existing state of government involvement in the economy in Book IV, Smith uses Book V to outline his principles regarding when and how governments should intervene in the economy. He sets out the obligation of the state to care for its citizens, proposes theories of taxation, advocating for taxation proportional to income, in addition to land values taxes, and describes a theory of public goods.

“The third and last duty of the sovereign or commonwealth is that of erecting and maintaining those public institutions and those public works, which, though they may be in the highest degree advantageous to a great society, are, however, of such a nature that the profit could never repay the expense to any individual or small number of individuals”

Adam Smith, Wealth of Nations: Book V

“How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.”

Adam Smith, The Theory of Moral Sentiments

Adam Smith has left the world with an enduring legacy. Written in the 18th century during the early years of the Industrial Revolution (1760-1840), his treatise on An Inquiry into the Nature and Causes of the Wealth of the Nations55 has transcended generations. Despite the radical and powerful forces that have continued to transform our world environment, the Wealth of Nations remains relevant today. One of the world’s greatest pioneers on the political economy, Adam Smith in the Wealth of Nations outlined the intellectual framework for the functioning of the free market economy.

The legacy of Smith

The main premise in this monumental work is that the division of labour, together with rational individual self-interest, would produce an equilibrium that would be beneficial to the overall community. In essence, the price system would accurately capture the accumulated preferences of investors and consumers in the functioning of the free market economy.

Famously describing the unseen forces driving the market as “the invisible hand”, Smith maintained that the equilibrium generated would result in economic prosperity that would be beneficial to society. He asserted that any interference with such free competition would likely be injurious to the economy, absent a compelling reason to intervene.

While his ideas and principles articulated have provoked much debate, it continues to be relied upon as an intellectual framework from which powerful solutions can be derived – while being contextualised in dramatically different environments. Years later, Milton Friedman described this phenomenon as “cooperation without coercion”.[1]

Unlike some of his contemporary followers, however, Adam Smith did recognise that certain parts of the economy did require targeted intervention by the state. Book V of the Wealth of the Nations represents his overture into the role of the state within his core thesis of the laissez faire market economy.

In it, Smith acknowledges that the invisible hand did indeed need a helping hand from the state to achieve a good life for society. However, Smith clearly stated that this should be targeted and limited in scale with the responsibilities of the government being confined to specific areas as outlined in Book V. He emphasised that production and should still be predominantly privately owned.

The global economy

In the generations since, we have experienced fundamental changes to our environment in terms of the productive capacity and interconnectedness of the global economy, both shifts anticipated by Smith’s focus on the transformative power of the division of labour. As we fast forward into the contemporary world, these changes have been even more profound and transformative.

Alongside these positive changes to the global economy, the world has also becoming increasingly disordered with extreme and unstable conditions. These have arisen from a range of major global disruptions – including the catastrophic consequences of the global health pandemic, the climate change crisis and the accelerated advances in technology which have cumulatively led to unimaginable changes in how business is conducted and how we live our lives.

Some of these developments are also reinforcing other systemic issues, such as indebtedness and inequality. The world has also become more vulnerable and prone to recurring crises with highly damaging consequences on the environment and on humanity. How relevant then are Adam Smith’s ideas to this contemporary environment? Equally importantly, how relevant are these ideas to a developing world that is becoming increasingly significant in the global economy?

The duties of the state

The most urgent and pressing issue confronting contemporary economies is sustainability. This essay will examine the ideas proposed in the fifth and final book of the Wealth of Nations and whether indeed it provides an intellectual framework for solutions to this challenge. What would Adam Smith have said on such issues surfaced by the climate crisis and the interventions being envisaged to address them?

For several of these complex and ambitious agenda, neither the market nor the state can achieve the aspired outcomes on their own. Is there then an optimal arrangement in which the private sector can participate collaboratively with the government in the provision of the public goods that would not cause injurious outcomes alluded to in the Wealth of Nations?

Also considered is its relevance to emerging and developing economies. This essay will also discuss some of the pre-conditions that would be needed for the effective functioning of the free market and for generating the optimal outcomes envisaged in the Wealth of Nations that would benefit society.

As mentioned previously, Book V of The Wealth of the Nations highlights that, while private markets function more efficiently and are more productive to create the best outcomes for a nation, there are specific areas in which intervention by the state is required. Covered in three Chapters, Book V discusses the specific areas that should be the responsibility of the sovereign, how these responsibilities might be managed and financed including his views on public indebtedness.

He believed that the most important responsibility of the government is to protect society. He asserted that the first duty of the state was to provide protection from the dangers to society, which during that time was predominantly against violence and crime and from invasions from other nations. The state therefore needed to provide a policing and military force, to be maintained for this purpose and eventualities.

The second duty of the sovereign, as identified in Book V, is to protect members of society from oppression and injustice. Smith believed that such actions and crimes were driven by avarice. A justice system was therefore an integral part of the system to provide protection to society from such crimes. The third duty of the state concerns its role in providing the supporting infrastructure and public works that were considered as vital for the well being of the society.

This part of his work foreshadows the modern thinking on public goods. While the state had an important role, Adam Smith was still of the view that it should be as limited as possible and that such activities would function more efficiently if it was privately funded. In Chapter 2 of Book V, Adam Smith outlines the sources of revenue to provide funding for the public expenses outlined in Chapter 1.

Here, the most enduring contribution is his conception of the tax system which he believed should be proportionate to the ability to pay and have sufficient clarity to avoid any ambiguity while also being convenient. Such taxes should also not be any more than that required for the functioning of the state. Additionally, if the taxes were not well formulated it would not only affect pricing but could result in distortions.

He also discusses at length the corporate structure for such public works, believing private institutions would be superior to public ones. He was not keen for public companies, noting that the separation of ownership and management could not only lead to negligence, but it risked managers to profit at the owner’s expense [2]. He nevertheless suggested that for activities that required a lot of capital, such as those for financial institutions and utility companies, that it would be best managed by a group of persons.

In Chapter 3 he raised warnings on overborrowing by the government and maintained that if spending is unchecked it would result in the ruin of nations. Specifically mentioned in Book V is the provision of education by the state, essentially considering it as a public good. Adam Smith also believed that everyone should have access to education. He was an early advocate for inclusion and being inclusive on grounds that it would increase the potential of the labour force.

While tuition fees should be charged to the students, he also had the view that it should be made available to the poor and that such education should be subsidised and paid for by the state. He maintained that a more educated society would be better positioned to make better choices, thereby making for a more orderly and prosperous society. Indeed, for emerging and developing economies, this is the one single manner in which poverty can be eradicated and for inequalities to be reduced.

From public goods to climate action

Knowing Smith’s position on public goods, what can we surmise that he would have said about the planet? Under the public goods framework, the planet can essentially be considered as the ultimate public good, with the stock of natural resources that includes the air, soil and water that has been bestowed upon us by nature. With decades of negligence and plundering of nature, the owners of capital in this era have an additional responsibility and accountability – to ensure the sustainability of our planet.

Until now, the planet has contributed towards sustaining human life. For those of Smith’s era, the idea that human activity could permanently damage the capacity of the planet to sustain humanity would have seemed unthinkable. However, as we well know, it is now at risk of being destroyed and depriving our future generations of the means to provide for themselves [3].

The protection of the environment would certainly fit with Adam Smith’s overall framework described in Book V. It would not be inconsistent with his premise that state interventions are necessary in the areas in which the agenda to protect the well-being and, indeed, the very security and existence of humanity. In this particular instance, the need to avert a climate catastrophe provides not just clear grounds for state intervention, but that this is in fact one of the most important responsibilities of the state.

The contemporary reality of environmental degradation has now prompted urgent attention. Three fundamental reasons explain this urgency. The first is that staying on this trajectory without action will render our planet no longer habitable in the long term, due to atmospheric conditions with high concentrations of carbon dioxide, amongst other pollutants, along with the resulting extreme temperatures and increasingly frequent natural disasters.

The second fundamental reason for urgent action is the immediate repercussions on human livelihoods arising from droughts and floods, and the third is the overall irreversible physical damage to our entire eco-system. Cumulatively, these outcomes are affecting health, food security and lowering the potential for economic growth and employment. These developments have therefore called for action to be taken for the protection of society from these risks and eventualities.

However, given the enormity and scale of the climate crisis being anticipated, it cannot be addressed by the state alone. Necessarily, it requires joint actions and combined efforts from the public and private sectors to avert the biggest challenge faced by humanity. Again, this is not inconsistent with the point made in Book V by Smith, that one of the fundamental responsibilities of the state is to protect its citizens and their livelihoods.

Interventions to support the climate change agenda have recently been centered on the objective of transitioning economies to net zero emissions. In addition to investments made by the state to respond to the risk of a climate related crisis, the interventions have ranged from providing the incentive structure to achieve these goals to the implementation of specific and targeted environmental regulation.

In the case of the former, the discussion on appropriate design of taxation in Book V can for example serve as a guide in the imposition of charges for emitting greenhouse gases to thereby determine an appropriate pricing for such activities, an example of the enduring power of Smith’s work. In the case of the latter, it has included compliance to standards, such as on transparency and disclosure, in addition to prudential regulation and guidelines.

Within financial systems, financial institutions have taken on an increasingly important role in the financing of investments in this domain and in the channeling of funds to the various respective sectors that support sustainable technologies, while avoiding those investments related to high carbon activities. The increased requirements for disclosure of information in effect strengthens the invisible hand [4].

It provides information on the risk taking that may damage the environment by the investment. It is maintained that such market discipline provides a powerful mechanism to constrain excessive risk taking [5]. Other policy measures and tools applied to preserve financial stability include the adoption of stress testing applied to financial institutions. Such tests now incorporate assumptions on the risks of climate-related shocks.

It also includes guidelines for incorporating environmental issues into their risk management processes. In several emerging economies in Asia and in Latin America, it has also included measures such as guidelines for loan documentation that require compliance with environmental standards and efforts taken to advance green financing in the capital markets.

To promote this asset class in South East Asia, the ASEAN Green Bond Standards were introduced in November 2017 [6]. Further interventions have also included direct spending by the public sector on green physical infrastructure. Initiatives have also been taken to develop a common language to facilitate understanding and progress in taking the agenda forward.

Notably, the ASEAN economies have also commenced work on the Taxonomy for sustainable finance, similar to that in the European Union, to be completed in 2021.[7] Given the magnitude of the ambitions to address the climate change agenda, the goal to transition to low carbon economies cannot be achieved by governments alone. There needs to be increased investment activity by the private sector that embeds environmental considerations.

Such investments by the private sector have included those that aim at providing technological solutions to environmental problems, such as wind, solar power and hydro plants and other potential renewable energy generations.[8] There are also investments in other sectoral industries such as climate-aligned investments in agriculture. Finally, there are also the investments both by the private and public sectors in energy efficient public transportation, water, electric vehicles and green buildings.

What are the elements that would draw the market process to support such activities? Several initiatives have already been implemented to encourage and facilitate such investments. Broadly, it has included initiatives to align the market to the medium- and long-term targets to be achieved, such as the SDGs, improving the overall investment climate and the removal of counterproductive policies such as barriers and impediments for such investments.

Central to this is having in place the incentives that generate the appropriate carbon pricing. A further key initiative is the integration of the climate change agenda into the governance arrangements of businesses. Most of all, boards now have a duty to address climate issues. It is an opportunity for shareholders to influence corporate behavior in addressing this climate change agenda.

The command of knowledge and expertise on the subject matter is equally important. Finally, most companies now release a sustainability report on their strategies, progress and achievements in contributing towards the transition to a low carbon economy and towards environmental sustainability. Overall, this is indeed only a start. Encouraging is the momentum of further policy actions that harness both the strengths of the public and private sectors to advance this agenda.

Amidst the urgent concerns on the prospective climate change crisis, emerging and developing economies while being part of this agenda, are also transitioning towards becoming more market-driven to achieve greater development and progress. Experience has indeed shown that economies that have moved to accelerate deregulation to achieve greater market orientation and heightened liberalisation to participate in more competitive international markets have benefitted immensely in terms of the contribution to their growth and prosperity.

However, during periods of significant shocks, such economies have tended to experience greater damaging consequences [9]. The lessons that have been drawn from these experiences are that important pre-conditions need to be in place prior to deregulation and liberalisation and the move towards a more market driven economy.

Among them are to have strengthened financial institutions, developed financial markets and the necessary information and payment systems that are in turn reinforced with a developed and robust regulatory and supervisory oversight and that is supported by sound governance and risk management practices. These financial reforms which were implemented in many emerging economies in many parts of the world have indeed increased their resilience during the 2008-2009 Great Financial Crisis in the developed economies.

While the emerging economies were affected by the crisis, it did not trigger a financial crisis in their economies. Such risks, however, are always present. The 2008-2009 crisis also demonstrated that even developed financial markets have not been immune to becoming dysfunctional when confronted with extreme shocks. A further lesson is that policy tools such as ‘market maker of the last resort’, recently been implemented during extreme conditions to avert the severe consequences of a financial crisis.

Such interventions have generally been accompanied by conditionalities to address moral hazard concerns. Necessarily they have also been targeted and temporary. Finally, to conclude on the subject of Adam Smith’s premise that the invisible hand essentially translates the pursuit of self-interest into a public benefit. He believed that self-interest will eventually enrich the whole community.

It was in his earlier work, ‘The Theory of Moral Sentiment’, that he provided the ethical, philosophical and psychological underpinnings to the Wealth of Nations. He maintained that social psychology gave a better explanation to moral action than reason. He believed that overall, man would act in the best interest of others. “How selfish so ever man may be supposed, there may be some principles in his nature, which interests him in the future of others and renders their happiness necessary to him, through it derives nothing from it except the pleasure of seeing it”.[10]

From this, it can be interpreted that, had Adam Smith lived in the twenty first century, he would have been a strong voice and advocate for the protection of the environment, including to the risks that may have intergenerational implications leading to higher overall costs to our planet and humanity. In this case, the call would be for urgent action from both the state and the market to deliver an outcome that would allow our progress and prosperity to be enjoyed by our future generations.

Citations:

[1] As quoted in many of his works, including Friedman, Milton and R.D. Friedman (1962), Capitalism and Freedom.
[2] Indeed, this illustrates Adam Smith’s intuitive understanding of the problem of moral hazard before it was formalised in the modem literature
[3] Forcefuliy presented in Dasgupta, Partha (2021), The Economics of Biodiversity
[4] At the institutional level, banks and financial institutions now publish the criteria that is used to assess, monitor and report the green impact on the investments that is being undertaken. Global Alliance for Banking on Values (GABV) is a network of leaders from around the world that commit to advancing positive change in the banking sector to environmental sustainability. This is through transparency in terms of their assets that are committed to meeting the needs of the planet.
[5] A parallel can be drawn in the world of financial regulations in relation to financial stability in which financial regulation reinforce market discipline to internalise systemic risks. Bernanke, Ben /2007), Financial Regulation and the Invisible Hand
[6] ASEAN economies, comprising of ten countries in South East Asia, with a population of 600 million, and collectively in terms of the size of their economies. it is now the fifth largest country in the world.
[7] AFMGM (2021), Joint Statement of the 7th /\SEAN Finance Ministers and Central Bank Governors’ Meeting
[8] The 2016 IFC Climate investment Opportunities in Emerging Markets, An IFC Analysis provides an account of the progress in such investment in these respective regions.
[9] Discussed at length in Zeti Aziz (2014), Managing Financial Crisis in an interconnected World: Anticipating the Mega – Tidal Waves. Per Jacobsson Lecture http://www.perjacobsson.org/
[10] This quote is from the first line in Smith, Adam (1759), The Theory of Moral Sentiments.

About the Author

Tan Sri Dr Zeti Aziz | Former Governor, Bank Negara Malaysia & Co-Chair, Board of Governors, Asia School of Business

Tan Sri Dr Zeti Aziz served as Governor of Bank Negara Malaysia from 2000 to 2016, and currently serves as the Co-Chair for the Board of Governors at the Asia School of Business. She is known for her role in successfully managing the 1997-1998 Asian Financial Crisis and the strong recovery that followed.

She was instrumental in transforming the Malaysian financial system and building its robust resilience. She was a voice for the emerging world on many issues concerning the international financial system and financial and economic management. Dr Zeti holds a doctorate in economics from University of Pennsylvania.

If the extinction of the human race was a rock concert, Covid-19 would be the opening act and the Climate Crisis the star of the show. It really is that simple. Covid-19, while devastating, is just the opening gambit for what is to come: the deterioration of our planet to the point where mankind will cease to exist. Already, the picture that scientists are painting for us of how our world will look like by 2025 is we do not make major course corrections is a chilling one.

Extreme heatwaves, constant coughs, and regular mask wearing as the daily norm in most parts of the world. In a way, it is a preview of what’s in store for us, a warning that nature will self-correct if we don’t get our act together and start taking action to preserve our shared home.

This is why the Iclif Executive Education Center’s annual conference LESA, previously known as the Leadership Energy Summit Asia, has now been re-imagined, taking on a larger role beyond leadership of self and business, to harness the energy of corporations in making a stand and taking action in tackling climate change.

LESA is now Leadership for Enterprise Sustainability Asia, a virtual conference that acts as a reminder and catalyst for corporate citizens and the corporations they serve to take action and lead the way in making Sustainability the default way of business.

Ironically, if you think about it, climate change did not catch us by surprise like COVID-19 did. We’ve known about this for most of our lifetimes. The problem is that most of us are in denial of the problem and/or hope that others will provide a solution.

The real question is: How do we move from denial and avoidance to awareness and action? As with most things, education is key. You cannot take action if your head is buried in the sand!

LESA 2021 attempts to educate us on how climate change can be managed from a business perspective, how there is hope, and how we the business community can lead the way to realizing that hope.

While the problem of climate change is simple to understand, the solutions are complex and require a deeper understanding of the systems and dynamics surrounding them. This is how LESA aims to empower participations: by learning the complexities, it will allow us to take collective action that moves the needle.

The ICLIF Executive Education Centre at the Asia School of Business is committed to sharing such knowledge with the wider community and is offering Discovery Passes to anyone who wants to be educated on sustainability and climate solutions.

The Discovery Pass gives you free access to sufficient content to get you armed to become a force of change and advocate for sustainable practices within your organization. In tacking the climate crisis, we have no choice… We need to be the leaders we are waiting for!

As Christina Figueres, internationally recognized leader on global climate change who led the process to define a universally agreed regulatory framework culminating in the Paris Agreement of 2015, put it:

“We can no longer afford to assume that addressing climate change is the sole responsibility of national or local governments, or corporations or individuals. This is an everyone-everywhere mission in which we all must individually and collectively assume responsibility.” (The Future We Choose: Surviving the Climate Crisis)

Asia School of Business, established in 2015 by Bank Negara Malaysia and MIT Sloan School of Management, is a leading school of management focused on challenging conventional thinking and creating change beyond just business. ASB offers an MBA for both regular students and working professionals. The school has also started a Master of Central Banking program, a rigorous residential program that covers the central banking-focused curriculum.

Central Banks have a crucial role to play in kick starting growth in the economy in a post-pandemic world. Central banks have been assuming a more active role in the market in recent years, and this is likely to remain the same in the immediate future. It’s in this context that the Asia School of Business is hosting a webinar series titled Conversations on Central Banking.

Held in December 2020, the session focused on building resilience and policy frameworks. The focus was to discuss the increasingly complex and unpredictable environment facing central bankers and financial regulators. Some other factors addressed were the technological, institutional, and geopolitical changes creating new challenges for policymakers.

Here is a recap of all that was discussed during the webinar along with the key takeaways.

Brief introduction to our speakers

We had two distinguished, exceptionally experienced central bankers.

Dr Zeti Akhtar Aziz

Dr Aziz was the 7th governor of Bank Negara Malaysia, Malaysia’s Central Bank, and served 16 years in that position, from 2000 to 2016. She was the first woman at the post. Dr Aziz also played a critical role in successfully managing the 1997-98 Asian financial crisis and was instrumental in the strong economic recovery of the Malaysian economy.

She oversaw the transformation of the Malaysian financial system in the decade that followed, building its resilience. Dr Aziz holds a doctorate in economics from the University of Pennsylvania and is currently the co-chair of the board of governors of ASB in collaboration with MIT Sloan. Further, she has been the PNB group chairperson since 2008.

Paul Tucker

A former governor at the Bank of England, Paul Tucker is a research fellow at the Harvard Kennedy School. He has been the chairman of the systemic risk council for over three decades. He served on the board of the Bank for International Settlements, chairing the then-committee for payments and settlements.

He authored the book Unselected Power published by Princeton University Press, a must-read for anyone concerned with increasing demands placed on central banks for dealing with the multiple challenges facing the global economy today. He is currently working on his next book on international orders and systems. The session was moderated by Hans Genberg, Professor of Economics at the Asia School of Business and the Senior Director of Central Banking and Finance Programs.

Main touchpoints of the discussion

Let’s take a look at the key takeaways from the hour-long discussion and the question-and-answer session.

The emergence of digital platforms and their impact on financial stability

According to Dr.Zeti Aziz, two things affect how well a country survives any economic crisis.

The extent to which the country has built resilience and the policy frameworks in place to respond to the crisis. Resilience has to be built and policy frameworks developed well before the crisis happens. For instance, the crisis of 1997-98 helped Malaysia prepare better for the 2008-09 crisis with a more comprehensive toolkit policy in place. Therefore, the country could recover within just a year.
The ability to adapt to changing environments. The current environment is highly dynamic, with megatrends affecting and transforming it at every step of the way. Therefore, building resilience and policy frameworks is always unfinished business for a central bank.

It is necessary to be continuously involved in building resilience and recognize that we will be affected by unforeseen developments such as the ongoing COVID-19 pandemic. These events are unpredictable but financial resilience and a comprehensive policy framework can help minimize the impact of damages and aid rapid recovery. After all, resilience is the ability to withstand such developments and rise to the challenge of managing them and emerging stronger.

How countries can build economic resilience

Countries, governments, and regulatory bodies need to build resilience and a robust policy framework to be able to rise to the trials of the pandemic and its consequences. According to Dr. Tucker, it’s particularly relevant that central bankers stop thinking about resilience solely in terms of avoiding financial crises but rather to focus on overall capability building. How can this be enabled?

In the conversation, Dr. Aziz and Dr. Tucker focused on five major areas.

1. Economy

It is crucial to develop economic flexibility rather than being rigid. Further, this economic flexibility will allow us to adjust our resources in one area and diversify our economy to new sources of growth and the latest economic structures. It will help us effectively respond to crises. For example, Asia used to be export-led economies. Today, although exports are still relevant, our growth is driven by domestic demand.

It is true that it was previously driven by investment demand and there were excessive investments with negative consequences. However, now, our economies are driven by consumption demand. Asia is projected to comprise more than 50% of the global markets soon. We will represent 50% of consumption demands in the global economy. Moreover, diversified economies put us in a more resilient position.

2. Infrastructure

Adequate investment into infrastructure is critical. Different kinds of infrastructure are necessary for the functioning of the economy and its connectivity, not only within economic networks but with the rest of the world. When it comes to infrastructure resilience, a point Dr. Tucker raises is the importance of balancing interdependence with overdependence.

In the context of infrastructure, he quoted the example of the lack of emergency equipment and beds in US and European hospitals at the start of the COVID outbreak because of an over reliance on imports of the same, limiting options and capacity in extreme short-term situations. The resilience of financial systems is more relevant to central banks. Asia paid attention to this when building resilience through stronger financial institutions and more developed financial markets.

However, this is an area we are over-concentrated on, being bank-centric and focusing on financial systems. Around 50% of the financing is from the capital market, and in particular, the bond market. Having a resolution mechanism in place, including safety nets, essentially means having deposit insurance in place. It is essential for capital flows, and not only for surveillance purposes.

It helps recognize the potential of instability in the financial institutions and the financial markets. With regards to policy making overall, Dr. Aziz raised the point that both building policies and resilience is always an unfinished work, considering the dynamic global economic environment

The benefits of current Asian central banking efforts include regional integration, collaboration, and cooperation. It is important for surveillance, policies, experience sharing, and capacity building. Other overlooked factors are financial inclusion, raising financial literacy, and greater participation.

3. Strong financial institutions

Dr. Aziz stated that it is crucial to have strong financial institutions, both in the public and the private sector. Further, we need commercial institutions. Note that the governance, institutional competence, capability, and levels of integrity and corruption impact the resilience of any country. It demands efficient use of resources and a better overall economic and financial performance.

4. Identifying areas of vulnerability

Before any crisis, you should address your areas of vulnerabilities, leverage and indebtedness, and deficits, such as the balance of payments or fiscal damage. For example, when the crisis happened, like every other place, the demand for fiscal stimulus and support rose in Indonesia as well. It helped that they had the fiscal rule to respond and deal with areas of inefficiencies, rising inequalities, and yield essentially strong initial conditions.

Dr. Tucker brought in the example of the collapse of the BCCI Bank to underscore the need to identify and address vulnerabilities on your own, as opposed to depending on support after the fact, that may not be forthcoming.

In terms of financial systems, Asia dealt with the COVID-19 crisis from a position of strength. There will be many business closures and a rise in non-performing loans. However, they will come from highly capitalized and profitable financial institutions. This means that banks can absorb this and remain resilient.

5. Having a risk management system

Having a risk management system in place is critical to knowing what can go wrong. The one aspect that we must not forget is that the central banking business is in for the long haul and we should have a long-term horizon. Sustainability is very important. We need to care about the community and the environment as well so that overall resilience is achieved.

Overall, this webinar offered valuable insights to both current and future central banking policymakers. The key takeaways here are manifold, like the need to balance interdependence with overdependence, understanding the impact of bank policy making on the general population and being cognizant of the structural shifts in geopolitics.

Stay on top of the latest in central banking

If you are aspiring to build a long career as a central banker, learn more about our Master of Central Banking program, which has a laser-sharp focus on the expanding role of central banks in the global economy.

The school has also started a Master of Central Banking program, a rigorous residential program that covers the central banking-focused curriculum. Central Banks have a crucial role to play in kick starting growth in the economy in a post-pandemic world.

Central banks have been assuming a more active role in the market in recent years, and this is likely to remain the same in the immediate future. It’s in this context that the Asia School of Business is hosting a webinar series titled Conversations on Central Banking. One of the webinars in this series focuses on bloated central bank balance sheets. In this blog, we will recap the conversations with a focus on key takeaways from the discussion.

The speakers

We had two highly decorated former central bank governors to discuss this topic:

Glenn Stevens, Former Governor of the Reserve Bank of Australia (2006-2016)

Glenn Stevens has served in various roles in the RBA and was the Governor of the RBA from 2006 to 2016, navigating the global financial crisis as well as the following years of economic growth. He graduated from the University of Sydney in 1979 with a Bachelor of Economics, first-class honors. He then joined the University of Western Ontario for the Masters of Arts Program.

In 2014 he was awarded honoris causa, a Doctorate of Laws from the University of Western Ontario. Stevens has held many positions, such as Visiting Scholar at the Federal Reserve Bank of San Francisco, Head of the Economic Analysis Department, the Head of the International Department, and was Assistant Governor (Economic) at RBA before assuming the role of Governor.

Athanasios Orphanides, Former Governor of the Central Bank of Cyprus (2007 to 2012)

Athanasios Orphanides is currently a Professor of the Practice of Global Economics and Management at the MIT Sloan School of Management. From May 2007 to May 2012, he served a five-year term as Governor of the Central Bank of Cyprus and was a member of the Governing Council of the European Central Bank.

He is also an Honorary Advisor to the Bank of Japan’s Institute for Monetary and Economic Studies, a member of the Shadow Open Market Committee, a Research Fellow at the Centre for Economic Policy Research, a Senior Fellow at the Center for Financial Studies. Athanasios Orphanides obtained undergraduate degrees in mathematics and economics as well as a PhD in economics from MIT.

The webinar was moderated by Eli Remolona, Professor of Finance and Director of Central Banking at the Asia School of Business.

Key Takeaways

Let’s take a look at the key takeaways from the hour-long discussion.

Bloated Balance Sheets: It’s not a new problem

One of the key things to remember is that bloated balance sheets are not a new problem, and it is the consequences of the market situations that existed in the last few years. Central banks of leading countries like the USA, UK, and Japan have increased their assets by purchasing government bonds in increasing quantities.

The percentage of government debt held by the central banks in these countries is also interesting reading. The Bank of Japan holds 50% of the government debt while the other central banks hold about 20-30% of government debt.

How we got here is a good place to start. Central banks have been forced to adopt a policy of Quantitative Easing to navigate the global financial crisis. The COVID-19 pandemic and the health risk created a supply shock in the market too. Glenn Stevens says that being in a time of crisis, the banks have to respond to the crisis by buying government bonds to increase liquidity in the market.

Bloated balance sheets are a risk, but they’re not the biggest problem

Both Glenn Stevens and Athanasios Orphanides touched upon the fact that a bloated balance sheet is not a problem in itself, but other risks need to be considered. The crisis meant that the central banks had to act anyway, and not taking on this additional risk would have led to more serious issues in the market.

But this carries risk in 3 ways – Interest risk, Credit Risk, and Moral hazards associated with it can be considered as a risk too. “The problem with this policy is that the markets will expect the central banks to act in this way when the next crisis hits.

Central banks cannot let the markets correct themselves because the risks there would be far more than the actual risks incurred in expanding the balance sheet.” Athanasios, in his opening remarks, stated that the central banks wouldn’t be doing their job if it refuses to take on additional risk in a time of crisis, citing moral hazard as the reason.

He also presented his ideas to show how this is a structural problem and not just related to the crisis. “We needed a standard monetary policy easing that we could not execute due to prevailing low-interest rate conditions in the previous years. Most of the balance sheet expansion we see today could have been controlled by controlling the short-term interest rates, had it been higher.”

The Exit Strategy: What next?

The next part of the conversation focused on what the central banks should be doing to fix the bloated balance sheets. Both Glenn and Athanasios believe that this is not something that we can fix easily in the short term. They also agree that the banks cannot merely sell the debt and shrink the balance sheet because that would be contractionary for the economy and can be done only when the economy is stronger.

The real solution lies in enabling growth in the economy that ensures that the nominal GDP rates grow at a steady rate of 4-5% each year in the coming years so that the balance sheet balances itself. This will need a good balance between monetary and fiscal policy. Athanasios also stressed the importance of creating a growth narrative.

The narrative should focus on fiscal measures aimed at demand generation, combined with supply-side interventions that increase productivity as well as supply. Both the speakers believed that the central banks have to communicate more clearly regarding their policies and rules. The narrative should focus on keeping inflation low and having extremely accommodative policies that will encourage economic progress,” says Glenn.

It is too early to discuss exit strategy as there is no clear alternative to central bank intervention in such a crisis but what we need is a structured approach to the problem where we are intervening only when required and also maintaining the credibility and independence of the central banks.

Conclusion

The webinar saw a lively discussion and also answered questions from the listeners, majorly about exit policy and what is the right approach to managing the balance sheet problem. In closing remarks, Athanasios said that balance sheet problems are trickier to fix than interest rate problems.

So while central banks may still have to make some debt purchases in the future too, it needs to be re-emphasized why they are doing what they are doing and clear rules to ensure that the markets have clarity. “Balance sheet policies work when it is systematic and with clear inflation targets. That’s what the central banks have to do”, says Athanasios.

Glenn also remarked that the issues of governance, clarity of objectives, and preserving the independence of central banks are all important issues that need to be addressed through clear communication.

“What is important is that the central banks can quickly diagnose the issue, find what they need to do, be clear on what others need to do, and define what success looks like. If they do this job well, they can still retain its credibility,” says Glenn. More experts and practitioners will be sharing their views on the other sessions in this webinar series.

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Power dynamics describes how people exert their power either formally or informally, in groups. The former is usually exerted due to a person’s formal position within the hierarchy of the group, while informal power is exerted by persons who have influence over others in the group either due to their skills and experience, the force of their personality, or their social background and networking.

Power in itself is neither positive nor negative; it is the way that the power is exercised that affects group dynamics and culture. It is exercised negatively if the purpose is to control others in the group and affect the outcome of decisions. Conversely, it is exercised positively if everyone is allowed to express their views before arriving at a consensus.

Power dynamics on boards

Boards of directors are not immune to power dynamics. This carries great weight in determining board dynamics and consequently, the quality of the board’s decision-making. Board dynamics often work at the subconscious level and are impacted by board capital which is a combination of human and social capital. Human capital comprises the skills and knowledge of the board and their education and experience.

Social capital comprises directors’ life experience, their network of relationships, access to information that other directors do not have, and highly specialized skills not possessed by other members of the board.1

Some board members subconsciously defer to other directors due to the latter’s personal qualities, characteristics or reputation (referent power), expertise or knowledge in a particular area (expert power), or the seniority of a director on the board, namely the Chairman (legitimate power). In other words, they defer to directors whom they perceive as having more board capital than themselves. Consequently, board capital determines the ‘invisible’ ranking of directors on the board.

“When the impact of power dynamics on boards is not openly acknowledged, it affects the quality of decision-making.”

As with any other group, directors subconsciously internalize where they sit in the board’s power dynamics. Those with less board capital tend to engage in conscious attempts to gain approval and build relationships to enhance their position on the board, which could result in group-think. If there are several directors on the board with high board capital, the rest of the board members may align themselves to either one of those directors, resulting in sub-groups contesting for power on the board.

When the impact of power dynamics on boards is not openly acknowledged, it affects the quality of decision-making. Directors with lower board capital, and therefore less power, may not speak up if they have divergent views. They may also silence any doubts they have about certain decisions. This creates a cycle where directors with more board capital become more dominant by prematurely providing their views and dismissing doubts raised by directors who are perceived to have less board capital.2

As an example of the implications of board dynamics: Wells Fargo Chairman and CEO John Stumpf created a high-pressure sales culture that resulted in unethical sales practices and supported members of management who reinforced this culture. Various reports indicated that the board had been made aware of red flags (such as the dismissal of whistleblowers who reported the unethical practices) at least four years before legal action was taken against Wells Fargo by regulators.

However, the board chose to defer to Stumpf who had been acknowledged as one of the best bankers of his time, and accept his assurances that the unethical practices were anomalies and not widespread throughout the bank.3

Closer to home, the former Chairman of SRC International (a division of scandal-ridden 1MDB, which made a series of questionable investments) indicated that the board had approved decisions due to information provided by the CEO, Nik Faisal Ariff Kamil, whom they believed had close ties to former Prime Minister Datuk Seri Najib Abdul Razak. As advisor emeritus and Prime Minister, Datuk Seri Najib had the power to appoint and dismiss members of the board.4

In another case, the board of FGV Holdings, a government-linked company (GLC), comprising current and former very senior civil servants, agreed with the Chairman’s proposal to acquire non-core businesses which were not in any way beneficial to FGV Holdings, at exorbitant sums. The Chairman of FGV at that time was a Member of Parliament and senior member of the then-ruling party, UMNO.5 The proposed acquisitions fell through only because the CEO exposed them to the public.

In both these cases, it would appear that there was one board member perceived as having more board capital, and therefore more power than others, which influenced the rest of the board members to defer to him, instead of carrying out their fiduciary duties effectively.

Managing power dynamics

The first step towards managing power dynamics on boards is to acknowledge that it exists and to keep it at a minimal level. The Chairman should ensure that subject matter experts or persons of high stature are called upon last to provide their views. If the Chairman has much more board capital than other directors, he should not provide his views until all the other directors have had a chance to speak.

The Chairman should also provide a safe space for directors to ask questions or express their views. Providing a psychologically safe space will improve the robustness of board discussions and subsequently, the board’s decisions.

“The first step towards managing power dynamics on boards is to acknowledge that it exists.”

Another step is for Nominating Committees to be cognizant of power dynamics when appointing new directors. When conducting a board skills analysis and identifying gaps based on the company’s future strategy, Nominating Committees should go a step further and consider the candidates’ board capital and how this will impact board dynamics.

If the board is helmed by a dominant Chairman, the Nominating Committee should ensure that candidates’ board capital, taken together with other directors, is sufficient to balance that of the chairman. This is made easier if the Nominating Committee is headed by a senior independent director (SID) who possesses high board capital, and is one of the reasons why best practices in corporate governance recommend the appointment of a SID who should chair the Nominating Committee.

The power dynamics in owner-managed companies and GLCs which have appointed politicians or representatives of major shareholders as Chairman of the board needs to be addressed carefully. While the Malaysian Code on Corporate Governance discourages the appointment of politicians on boards of listed companies, this decision may be out of the hands of the Nominating Committee. The appointment of a SID or other directors with high board capital may provide a counter-balance to the power of the Chairman.

It is also important for incumbent directors to be conscious of the role that power dynamics plays in the quality of the board’s decision-making and to act accordingly to neutralize such power structures. Chairmen should not shy away from discussing power dynamics with newly appointed directors during their onboarding sessions. This will allow all directors to consciously monitor their behavior at board meetings.

Board diversity is another way of managing power dynamics on boards. Regulators and governance practitioners have recommended that boards have more diversity in terms of educational background, gender, culture, and age, among other things, on the grounds that diversity leads to better decision-making. Diversity affects existing power dynamics, as appointees tend to challenge the current power dynamics simply because they are unable to ‘read’ the informal power play in the boardroom.

However, the key to making diversity work is not merely to appoint directors from different backgrounds, but to ensure that there are sufficient numbers of such directors (at least 30%) with sufficient board capital to stand their ground.

Conclusion

The best board dynamics can be achieved when directors acknowledge that power dynamics play a role in the board’s interaction and decisions. If boards, especially Chairmen were to acknowledge and address this head-on, it will go a long way towards neutralizing power structures in boards.

References

Hillman, A. and Dalziel, J. (2003), ‘Boards of Directors and Firm Performance: Integrating Agency and Resource Dependency Perspectives’ Academy of Management Review 28(3) 383 – 396.
Thuraisingham, M., Strong Board Dynamics Could Increase Effectiveness and Influence’ Australian Institute of Company Directors at https://aicd.companydirectorscom.au/membership/company-director-magazine/2019-back-editions/september/board-dynamics
Hiltzik, M., ‘Wells Fargo Scandal Report Details Board of Directors’ Dereliction of Duty, but Gives Them a Pass’ Los Angeles Times, April 10, 2017; Egan, M., ‘Wells Fargo Scandal: Where was the Board? CNN Business, April 24, 2017; Veetikazhi, R. and Krishnan, G., ‘Wells Fargo: Fall from Great to Miserable: A Case Study on Corporate Governance Failures’, (2019) South Asian Journal of Business and Management Cases 8(1) 88 – 99.
Izzul Ikram and Emir Zainul, ‘SRC Appeal: Najib was entrusted with dominion of RM4b, says Sithambaram’, The Edge Markets, April 19, 2021 at https://www.theedgemarkets.com/article/src-appeal-najib-was-entrusted-dominion-over-rm4b-says-sithambaram
Jose Barrock, Esther Lee and Adam Aziz, ‘FGV in Turmoil’, The Edge Markets, June 22, 2017 at https://maa.theedgemarkets.com/article/cover-story-fgv-turmoil

Effective 28 April 2021, the Securities Commission updated the Malaysian Code on Corporate Governance (“MCCG”). What does this mean for Malaysian companies? For starters, companies with financial year ending 31 December 2021 will have to report according to the updated practices in the Code.

What’s changed and why?

One of the key policy considerations for the 2021 update was a global focus on issues relating to sustainability, especially climate change. The intended outcome is for companies to address sustainability risks and opportunities in an integrated and strategic manner.

What is the purpose of introducing these practices? Do they impose more responsibilities and costs on companies?

To answer the first question: according to the Climate Change and Principles-based Taxonomy discussion paper released by Bank Negara Malaysia on 30 April 2021, greenhouse gas emissions have increased the temperature of the planet, causing climate change. This is evident in climate volatility including drought and rainfall patterns.

Natural disasters have occurred more frequently with greater severity, due to human activity. According to Bank Negara, Malaysia has experienced over 50 natural disasters over a period of 20 years. This has resulted in RM8 billion monetary losses for the country. Not only that – these incidents have affected the lives of approximately 3 million people.

Around the world, other countries are also experiencing the effects of climate change. Due to this, about 200 countries agreed in 2015 to reduce greenhouse gas emissions and accelerate the transition to a lower-carbon economy. Without these efforts, climate change could result not only in natural disasters causing loss of life. It would also cause mass migration from these affected areas, disruption in supply chains, and other economic losses.

Implications for Malaysian companies

Bursa Malaysia’s listing requirements require disclosures to be made in the Sustainability Statement. Companies that have closely adhered to these listing requirements and referenced the Sustainability Reporting Guide and Toolkits will find that they would already have begun on their journey to make meaningful sustainability disclosures.

So, what exactly are companies required to do under the MCCG? The board has to set the strategic direction for the company which now includes addressing sustainability risks and opportunities. To do this, the board has to understand sustainability issues that are relevant to the company and its business, especially in relation to climate-related risks and opportunities.

This means the board should not rely solely on management for information as to what the risks and opportunities are. Instead, they should have sufficient expertise in order to be able to have robust discussions with management about the risks and opportunities that have been identified, how these have been prioritized, and how they will be managed.

The evolving role of the board

The board has to consider whether its current composition and skills would enable it to engage in in-depth discussions with management on sustainability matters. Does this require appointing a new board member with sustainability expertise, if the board lacks such skills and experience? Not necessarily, as this would increase the board’s size. Instead, boards could undergo training to increase their knowledge and expertise.

The MCCG expects boards to take sustainability considerations into account in the development and implementation of their company’s strategies, business plans, and major plans of action and risk management. This can be done only if the board has the right structure. It needs to have a sustainability or ESG committee that works closely with management to obtain sustainability data.

While management has to identify and assess the company’s material sustainability matters, prioritize these matters, and manage them effectively, the board has to endorse management’s approach and provide further guidance if required.

Some boards may choose to establish an ESG or Sustainability board committee. Others may leave it to management to establish a committee. However, the information about sustainability risks should be also discussed at the Board Risk Committee if the company has established one, as sustainability risks should be considered part and parcel of risk management.

The board is ultimately accountable for ensuring that sustainability matters are embedded throughout the organization. While it is management’s task to embed it into the daily operations of the company, the board should require management to report on how it has achieved this. For example, it should always ask management, whether sustainability risks have been considered, alongside other risks, when making decisions.

The board is ultimately accountable for ensuring that sustainability matters are embedded throughout the organization.

The board has to also require information from management on how it has communicated sustainability strategies, priorities, and targets to employees and external stakeholders. This should not involve merely obtaining reports from management. It should also be supported by evidence that this has been embedded throughout the company.

Sustainability: More than just climate change

It should be noted that sustainability is not just about climate change or other environmental matters. It also covers material social matters such as whether the company uses forced labor or whether there is diversity in its workforce. Instead of relying on management’s reports on these matters, the board should require data to be provided on these matters.

In some cases, the board may even need to go to the extent of gathering information on its own about this topic. For example, if the board hears reports about forced labor or other breaches, it should in addition to requiring clarification from management, gather information from the media (including social media) on this matter, and perhaps even consider site visits to determine if there is any truth to those reports.

The consequences of not doing so could expose the company to reputational risks or affect its social license to operate. Consider the recent incident involving Rio Tinto, one of the world’s largest mining companies. The company knowingly destroyed Juukan Gorge, comprised of 46,000-year-old caves, although there were representations from Australian indigenous groups and evidence showing that the caves were of archeological value.

As a result of public outrage, the company subsequently removed several members of senior management. However, activists called on investors to hold the Chairman and the board accountable for the actions of management. The Chairman has indicated that he will not seek reelection at Rio Tinto’s next AGM.

Tying action to incentives

Another focus of the updated MCCG is on incentives for boards and senior management to apply good sustainability strategies and practices. What are the implications for boards and management that do not consider sustainability matters seriously? The MCCG emphasizes that there should be disclosures on how the board’s performance and remuneration are tied to the company’s ability to manage sustainability risks and opportunities.

This would mean that internal and external board performance evaluations would have to specifically include an assessment of these areas. In addition, senior management’s key performance indicators should also be tied to an assessment of how well they have managed the company’s sustainability risks and opportunities.

In a nutshell, the recent update of the MCCG focuses not merely on reporting, but on implementing and enforcing robust practices to mitigate sustainability risks and opportunities. Boards must get up to speed on their understanding and awareness of these issues, and be ready to get hands-on in terms of managing them.

About Dr. Elsa Satkunasingam

Dr. Elsa Satkunasingam is a Senior Business Development Adviser Corporate Governance at Iclif Executive Education Center at Asia School of Business. She conducts training programs and carries out research in corporate governance. She also teaches in the Pathway to a Governance Practitioner Programme (namely the Governance and Integrity Module).

Prior to that, she was the Deputy General Manager, Corporate Secretariat Division at Perbadanan Insurans Deposit Malaysia (PIDM) specializing in research on corporate governance and compliance. Her role included updating the Governance Committee and the Board on the latest global and regional developments in corporate governance. She also conducted training for PIDM’s staff as part of PIDM’s Compliance Programme. View Dr. Elsa’s full profile.

“I wanted to help other people find meaning, and this inspired me to go into coaching.”

Mental and emotional health are some of the least discussed topics in our society today, yet they impact a wide range of people. People who struggle with it are often stigmatized and are left without a supportive environment. At Asia School of Business (ASB), a pioneering and innovative business school, we strive to challenge the norms and spark new dialogue. This extends beyond just the business sphere, to our personal lives and mental wellbeing as well.

With the establishment of the Coaching and Counseling Center at ASB, we strive to create a supportive environment for people to thrive. Being able to support individuals at work and in the campus environment is critical to ASB’s core value of nurturing people’s physical, intellectual, emotional, and spiritual well-being. During the recent Mental Health Awareness Month in May, we had the privilege of speaking to Michele Sagan, Head of the Coaching and Counseling Center at ASB.

She is a psychotherapist as well as a certified executive and life coach, and completed her postgraduate studies in psychotherapy. Prior to diving into the coaching and counseling world, she spent twenty years in finance, management, human capital, and leadership roles, both in Malaysia and the UK, at global organizations including HSBC, Iclif, and CIMB.

Michele is passionate about channeling her decades of experience working with people into helping them increase their wellbeing as well as dealing with a wide range of personal, mental, and emotional concerns such as anxiety, PTSD, relationship problems, and team conflict.

In a candid conversation, Michele shared her journey of how she discovered her passion for coaching and counseling that led to her heading the Coaching and Counseling Center at ASB. As awareness of mental health continues to grow in the wake of Covid-19, Michele discusses how mental well-being impacts both our personal and professional lives and the need for balance.

Crystal: Hi Michele! You’ve been in the coaching and counseling space for 8 years. But before that, you were in the corporate world. What inspired this big change?

Michele: I always tell people that they need to be their most authentic selves and do the things that add meaning to their lives. For me, it was just about putting this advice into action. After decades of working in finance, I realized that what mattered to me was not crunching numbers but empowering the people behind the numbers. I started at Iclif in the area of leadership development and when I moved to ASB, I set up ASB’s Coaching and Counseling Center. 

Right now, I’m doing what matters most to me: empowering people to become their best selves. Becoming certified as a coach and psychotherapist has further equipped me with the tools I need to help people with greater nuance and a greater depth of understanding.

Why does ASB’s Coaching and Counseling Center exist?

Today, it has become increasingly important to support students and staff in terms of their mental and emotional well-being. There are so many stressors out there for students to navigate – from their workload to relationships to family issues.

Counseling centers offer a safe space where mental and emotional health discussions can be normalized and tackled head-on. At ASB, we are pleased to be able to offer a wide range of coaching and counseling services to support our students, staff, faculty, and community.

How is the coaching and counseling center at ASB structured?

In line with ASB’s commitment to wellbeing and excellence, ASB Coaching and Counseling Center provides a comprehensive service not just focused on mental health management but also on the wellbeing and personal development of each and every one of ASB’s community members. ASB’s Coaching and Counseling Center provides a variety of coaching and counseling approaches, including:

Executive coaching

To support professional growth, we provide executive coaching focused on developing competencies so our staff and students can excel at work. We provide both individual and group coaching that cover a variety of topics such as leadership development, working in teams, stakeholder management, managing change, and more.

Counseling 

You can never tell when a student or staff member will need mental and emotional support. This is why we offer ad-hoc, walk-in counseling. This provides a safe and confidential environment for staff and students to address their psychological, emotional, and developmental needs. Staff and students benefit from individualized treatment plans and one-to-one counseling sessions.

Advisory

When issues arise between different parties such as between students and ASB as a school, or between bosses and team members, we feel it’s important to have a trusted intermediary. As such, we provisory advisory in grievance cases and help people work toward positive resolutions.

Apart from these tailored services, we also have regular fireside chats throughout the organization to create a space to discuss topics related to mental and emotional health and work hand in hand with the HR department to continuously engage ASB staff and faculty through various wellbeing initiatives.

Michele Sagan is the Head of the Coaching and Counseling Center at ASB.

Why do we need to have more conversations around mental health?

Mental health is not only about managing mental health issues, it’s about wellbeing as a whole. It is about finding a balance and managing all aspects of your life from your mental, emotional and spiritual states to your physical wellness. It’s also about cultivating a sense of purpose and meaning in life while accepting who you are even as you strive to become your best self.

In many ways, mental health can be more important than our physical health because our physical health is often impacted by our mental and emotional states. It’s physiological at the end of the day. From an organizational perspective, it is also important to support staff wellbeing as we need to bring compassion and empathy to the workplace. We don’t want a workplace with no soul, no heart, and no spirit.

“We need to bring compassion and empathy to the workplace because we don’t want a workplace with no soul, no heart, and no spirit.”

How has Covid-19 impacted our mental health?

For one, everyone is afraid for their own health and that of their families. This put significant stress on all of us. On top of that, we are all suffering from anticipatory grief where we grieve the future we had planned for ourselves and our loved ones – a future that is no longer certain because of this pandemic. When there is no clear end in sight, our stress is compounded further as we try to adjust to the new normal.

Covid-19 has also seen a shift to working from home, and many respond to rising demands in the workplace by putting in longer hours, which takes a toll on us physically, mentally, and emotionally. Covid-19 fatigue does not help either, as we try to adapt to the new normal with increased Zoom and screen times. Technology also means it has become increasingly difficult for us to separate work from personal lives.

It is common to check emails at all hours, take business calls at meals, and work on weekends. As such, the number of cases of people suffering from stress, anxiety and depression has increased significantly during the pandemic. And because employees are working remotely, and micromanagement is no longer possible, it is more critical than ever that organizations focus on keeping their people motivated.

Trust is now the most crucial commodity in any organization – trust between employers and employees. Employees will only give their best to organizations they trust and as such organizations have to put compassion and empathy at the forefront and center of any employee engagement initiative, bringing the ‘human element’ back into the workplace.

Has the dialogue around mental health improved since you started out in this space?

I think there is still stigma everywhere. But today, we see more people are opening up and saying, “I’m stressed; I’m not handling things well.” In the past, people didn’t share these things. Attitudes like, “If I’m a high performer, I can’t have mental stress and can’t bring it to the professional table” were more prevalent. But now, people are more open about their need for support, realizing that it is valid.

They have come to realize that their mental health concerns are the same as any physical health impairment. If you’re not well, whether physically or mentally, then there is nothing wrong with seeking help and treatment. If we can get sick physically, why can’t we get mentally or emotionally ill? There are many viruses for mental health, such as toxic relationships, unhealthy habits, or the pressure put on you by society. 

So do bear in mind that seeking help for mental health is just like seeing a doctor for a physical ailment like the flu – you learn about your symptoms and then receive treatment for them.

“…today, we see more people are opening up and saying, “I’m stressed; I’m not handling things well.”

What’s your advice for the way forward?

Mental well-being must be given priority. Yet it’s hard for people to find trusted, safe spaces where they can address issues, or just vent. This is a key part of what we’re trying to do at the Coaching and Counseling Center.  We know how personal these issues are: that makes privacy critical to everything we do. Every single conversation with our coaches and counselors is kept highly confidential. Neither the colleagues nor the managers of people who use our services will know that our services are being used.

If we can get sick physically, why can’t we get mentally or emotionally ill? There are many viruses for mental health, such as toxic relationships, unhealthy habits, or the pressure put on you by society.

More people than you think are reaching out for help. As a professional in this space, it’s clear to me that it is more important now than ever that we are there to provide them the support they need.

Do remember though that at the end of the day, that the only person responsible for your own wellbeing and happiness is you. You have the power to change your situation and the first step to changing your life is to help yourself. So reach out and so speak to someone to get the support you need so you can live a fulfilled and meaningful life.

Filipino-born Ponce Samaniego isn’t your traditional MBA. After working in social development at the Asian Development Bank, he had more than impressive accolades and salaries on his mind when joining the Asia School of Business (ASB) MBA. “ASB attracts academics, corporate partners, and MBA students from around the world who are motivated by the opportunity to build something unique,” he asserts.

Through his MBA, Ponce was able to secure a fellowship at ASB’s partner school, MIT Sloan, studying for a Master of Science (MSc) in Management Studies. With this global experience and depth of knowledge under his belt, he landed a role working as a senior program manager at Amazon in the US. Here’s how he made it happen.

Experiencing new business industries on the MBA

With the experience of leading social impact projects across 15 countries, Ponce admits that finding an MBA program that would excite and challenge him wasn’t easy. ASB’s location in Kuala Lumpur, Malaysia, at the heart of the fast-moving Southeast Asia region, was one determining factor for Ponce.

Wanting to tap into the Malaysian business school’s “vibrant and entrepreneurial energy”, Ponce embarked on the MBA, determined to use his time there to quench his thirst for adventure and immerse himself in the business world.

ASB’s Action Learning (AL) projects—immersive consulting projects at real companies—exposed him to different career industries and routes he hadn’t thought of before the MBA, tackling business problems in the banking, food and beverage, and agricultural industries across areas like corporate social responsibility, human resources, and data analytics.

He was also able to directly apply the management framework learnings from the MBA, taught by a mix of ASB and visiting MIT Sloan professors, into these practical projects, experiencing first-hand how to lead across various sectors effectively. “The MBA made me a globally competitive professional, making me even hungrier for new experiences to learn and opportunities to create something special,” he notes.

Building tech skills in the US

With a fresh set of skills and new-found confidence after his MBA, Ponce set his sights on MIT Sloan’s MSc in Management Studies (MSMS). This 9-month program allows MBA students from select partner schools, such as ASB, to gain a Master of Science degree and specialize in a field of their choosing.

“After the ASB MBA, I became hooked on learning more about innovation. That was when I decided I wanted to transition to a role in tech,” he reflects. The MSMS offered the perfect route to expand his business and managerial skills he’d developed through the MBA and build more tech-focused skills in an entrepreneurial environment, opening new and exciting career avenues for him across the US.

His ASB experience was a strong asset to his application. “The ASB alumni and faculty played a critical role in my MSMS admissions process as I believe that their view on my academic and professional abilities, as well as long term career aspirations, carried significant weight on the MIT admissions’ decision,” he notes.

As a reflection of his academic achievements, he also received the ASEAN Fellowship, funded by Bank Negara Malaysia, the founders of ASB. Honing his tech skills was a priority for Ponce on the MIT Master’s, taking courses in data analytics and innovation, while also gaining hands-on experience on a project at a startup in Israel.

Landing a role as an Amazon program manager

Ponce has used the combination of his MBA and MIT Master’s to land a career as a senior program manager at Amazon in Seattle, having completed the fabled MBA “triple jump” (switching locations, industries, and job function).

Working at Amazon, one of the largest tech firms globally, Ponce wants to learn everything there is to know about the disruptive influence of technology. “After my ASB and MIT experience, I became interested in learning more about how we can use technology and innovation to achieve systemic change,” he reports.

He works for Amazon Flex, an app that allows independent contractors to make deliveries to Amazon customers, managing a team that supports and drives operational improvements for delivery partners and customers.

On a daily basis, he deploys skills from his MBA to propel his career forwards. During ASB’s AL projects, he’s developed ‘sharp’ technical skills like systematic problem-solving and ‘smart’ skills like resilience and teamwork, which he’s applying into his role as an Amazon program manager.

What’s more, these intensive projects have prepared Ponce for transitioning to a new job, industry, and country amidst COVID-19. “Through AL projects, we’ve built relationships across borders in a short amount of time, working remotely with our hosts in between trips.

As a result, we’ve learned to trust in our ability to learn quickly, adapt, and face unknown challenges,” he notes. Ponce’s MBA helped him build a global network, gain broad leadership skills, and gain access to a world-renowned master’s program: the perfect launchpad for his career as a senior program manager at Amazon.

Read the full article here.
This article was originally published on BusinessBecause, a network helping MBA students make connections before, during and after their MBA.

For future business leaders, the COVID-19 pandemic has been a lesson in preparing for uncontrollable situations. Recovery is likely to see many workplaces experiencing change, as well as rapid digitalization. Preparing for this future of work will demand leaders to embrace several important skills and competencies, as well as a renewed emphasis on resilience leadership.

We spoke with Loredana Padurean, associate dean and faculty director for Action Learning at Asia School of Business, to identify the various skills that you can gain from an MBA that will help you build resilience as a business leader, and prepare for a new way of working.

You’ll master ‘smart’ and ‘sharp’ skills

Skills are often separated into ‘soft’ and ‘hard’ categories. These definitions gained traction within a manufacturing-based economy, where ‘hard’ skills related to working with machinery, and ‘soft’ skills detailed those needed for working with people. Many believe this terminology is no longer useful in today’s business world, where humans and machinery work hand in hand.

Industry 4.0 requires business leaders who can use their sharp intellect to organize a team, while also having the technological know-how to design ways of accelerating business processes. For ASB, the future of work demands the interconnectedness of these ‘sharp’ and ‘smart’ skills for truly resilient leadership.

Asia School of Business (ASB) has reframed the terminology of these skills: technical skills are defined as ‘sharp’ since, in today’s environment, digital and tech skills need to be continually updated and sharpened, while calling the skills which demand intelligence and diplomacy as ‘smart’ skills as these help employees navigate the workplace environment.

You’ll learn to embrace adaptability and flexibility

After a year characterized by uncertainty, the ‘smart’ skill of adaptability will be crucial for managing a team in a post COVID-19 world. “You constantly have to adapt to new environments in business, particularly at times of crisis,” reflects Loredana. Being able to navigate uncertainty and adapt to ambiguous situations will provide you with a competitive edge in an ever-changing business landscape.

During COVID-19, ASB MBA students had to quickly adapt to working alongside other MBAs in various time zones during immersive group projects, learning the value of adaptability and problem-solving in novel situations.

With 54% of employees wanting to continue to work from home after the pandemic, understanding how to navigate the challenges of a digitalized world has become ever more crucial for the future of work. ASB helps MBAs become business leaders well versed in meeting the demands of a digitally connected world.

You’ll learn that entrepreneurial thinking isn’t just for startups

When the going gets tough, it’s important to bring new ideas to the table, especially when you’ve exhausted previous ideas. Creativity ranks among the most desired attributes in the job market, according to a LinkedIn study. Loredana believes intrapreneurship and entrepreneurship are at the heart of leadership, particularly throughout COVID-19.

“These skills teach you how to problem-solve, how to react to an environment of constant change, and how to rely on limited resources,” she notes. Cognitive readiness—featured amongst ASB’s top ‘smart’ skills—is an essential component of intrapreneurial and entrepreneurial thinking.

This skill relates to being mentally prepared for issues you encounter in complex situations, as well as an ability to predict how future issues might impact your business. You can put your cognitive readiness to the ultimate test in real-world business situations during entrepreneurial Action Learning (AL) projects on the ASB MBA.

This is where you’ll try your hand at creating a new product, developing the prototypes, and then formulating a strategy for your product. Through these hands-on projects, you’ll gain experience of what it’s like to continually adapt your business idea to consumer needs since you’ll receive feedback from potential buyers.

You’ll be prepared for the technological revolution

As businesses become more digitalized, future business leaders require the confidence, knowledge, and aptitude to apply technology to business processes. This requires more than just swotting up on ‘sharp’ technical skills across topics like AI, blockchain, and big data. Without intelligent insight from humans, digital transformation cannot go far, explains Loredana.

Therefore, in addition to learning technical skills, you’ll need ‘smart’ skills like adaptability and cognitive readiness to meet the changing demands of the digital shift. Future MBAs who want to be part of the digital transition should look to regions like Asia, where the technology sector has fueled a quick economic recovery across Asia.

The ASB MBA offers opportunities to explore the intersection between technology and business. ASB MBA grad Saloni Saraogi experienced the growing influence of fintech on modern financial institutions during her AL project at Bangkok Bank. This drove her to explore how technology can be a tool for financial inclusion—the theme of her research with the United Nations Capital Development Fund.

Throughout the ASB MBA, you’ll spend almost a third of your time involved in integrated action learning projects with companies, providing plenty of chances to practice ‘smart’ and ‘sharp’ skills in a real-world environment. No one can predict the future impact of the pandemic on business industries. An MBA, however, can help prepare you for inevitable uncertainty, while arming you with the competencies to bring fresh, innovative ideas. This is what true resilience looks like.

Read the full article here.
This article was originally published on BusinessBecause, a network helping MBA students make connections before, during and after their MBA.

Image courtesy of BusinessBecause

Data Analysis: The Base Line of a Proactive Health Care System

The Shape of Change: Tomorrow’s Health Care Professionals and Patients

Result-Based Services for All

Conclusion

The legacy of Smith

The global economy

The duties of the state

From public goods to climate action

About the Author

Brief introduction to our speakers

Dr Zeti Akhtar Aziz

Paul Tucker

Main touchpoints of the discussion

The emergence of digital platforms and their impact on financial stability

How countries can build economic resilience

1. Economy

2. Infrastructure

3. Strong financial institutions

4. Identifying areas of vulnerability

5. Having a risk management system

Stay on top of the latest in central banking

The speakers

Glenn Stevens, Former Governor of the Reserve Bank of Australia (2006-2016)

Athanasios Orphanides, Former Governor of the Central Bank of Cyprus (2007 to 2012)

Key Takeaways

Bloated Balance Sheets: It’s not a new problem

Bloated balance sheets are a risk, but they’re not the biggest problem

The Exit Strategy: What next?

Conclusion

Stay on top of the latest in central banking

Power dynamics on boards

Managing power dynamics

Conclusion

References

What’s changed and why?

What is the purpose of introducing these practices? Do they impose more responsibilities and costs on companies?

Implications for Malaysian companies

The evolving role of the board

Sustainability: More than just climate change

Tying action to incentives

Crystal: Hi Michele! You’ve been in the coaching and counseling space for 8 years. But before that, you were in the corporate world. What inspired this big change?

Why does ASB’s Coaching and Counseling Center exist?

How is the coaching and counseling center at ASB structured?

Why do we need to have more conversations around mental health?

How has Covid-19 impacted our mental health?

Has the dialogue around mental health improved since you started out in this space?

What’s your advice for the way forward?

Experiencing new business industries on the MBA

Building tech skills in the US

Landing a role as an Amazon program manager

You’ll master ‘smart’ and ‘sharp’ skills

You’ll learn to embrace adaptability and flexibility

You’ll learn that entrepreneurial thinking isn’t just for startups

You’ll be prepared for the technological revolution

Need more information? Reach out to us.