New Asia-Pacific survey finds SMEs still willing to take risks for growth, despite economic crisis; young adults see need to plan finances but don’t act

15 June 2009, Asia Pacific

A new study on the risk appetite of Asia-Pacific’s Generation X and Y of 20 to 40 year olds, has found that despite the global economic downturn, most Asia-Pacific SMEs are still willing to take risks to achieve growth while being more cautious about operational risks. The survey also showed that as consumers, these young adults are more concerned about their financial future than expected but few have any plans in place to manage that future.

Survey sponsor Swiss Re, one of the world’s largest and most diversified reinsurance companies, also uncovered a strong interest among respondents to review their insurance cover under the threat of swine flu. Mr Clarence Wong, Swiss Re’s Chief Economist for Asia, said this and the financial planning gap appear to be emerging business opportunities for the financial and insurance industry.

The “Swiss Re Survey of Risk Appetite: Asia-Pacific 2009” was launched in the first quarter of 2009 to gather insights on the risk-taking attitudes of consumers and small and medium enterprise (SME) decision-makers in the age group of 20 to 40 across eight Asia-Pacific markets. The survey covered four key consumer risk aspects: finance, career, health and lifestyle, as well as two key business risk aspects: growth and operation. To allow comparison between markets, and so changes can be tracked over time, the results were consolidated into two indices: the Swiss Re Asia Pacific Consumer Appetite for Risk Index (CAFRI) and Business Appetite for Risk Index (BAFRI).

Consumer risk attitudes

Overall, the study found that most of the region’s 20- to 40-year olds are relatively cautious; Indians and Malaysians are the most risk-averse, with CAFRI values of 41.4 and 41.5 respectively, compared with those from Hong Kong and Australia who, at CAFRI values of 47.8 and 49.0 respectively, have the highest appetite for risk.  Respondents from the two largest emerging economies, China and India, are quite different in their risk-taking attitudes.

In fact, the study found a high correlation between the CAFRI and per capita income levels, indicating that perhaps contrary to popular belief, the more you have to lose the more you are willing to risk.  Mr Wong explained that without state supported pensions and health schemes, emerging market consumers tend to be taking fewer risks with their personal and financial futures.

More talk than action in financial planning 

The Swiss Re survey, which was conducted in the depths of the global economic downturn, showed that 20 to 40 year-olds in Asia-Pacific, especially those in India, Singapore, Malaysia and China, are generally reluctant to take financial risks.  

Across the region, consumers were found to be highly aware of the need to secure their financial future – even singles in the 20 to 30 age range claimed to spend a lot of time thinking about it. Most consider capital preservation a top priority in any investment. Equally, however, many professed to not having any plan for how to do this, especially in Japan, South Korea and Australia.

Mr Wong said: “The significant gap between those who think a lot about ensuring financial security and those who actually take action would appear to be a great opportunity for financial services providers.“

“However, this study also indicates that the willingness to engage professional financial planners is generally low, except perhaps in South Korea,” Mr Wong added. “To a certain extent, this reflects the relative newness of financial planners as a distribution channel in Asia-Pacific. Much effort is needed to raise public awareness of the importance of financial planning early on in life, and how qualified financial professionals might add value to this lifelong process. Financial professionals also need to better understand how to reach and provide quality service to young adults,” he said.

Job security matters, but entrepreneurship is still alive

In general, under-40 adults in Asia-Pacific tend to prefer a stable job over the challenge of starting their own business. 

Indians and South Koreans show the strongest and most distinct aversion to taking career risks, whereas Australians, followed by Singaporeans, are more willing to do so.

“Valuing security is no surprise amid the current deterioration of the job market and business environment,“ Mr Wong remarked. “Having said that, our survey also notes that a stable 20% of respondents (slightly fewer in South Korea and India) are keen to run their own business, indicating that entrepreneurship is still alive.”

Where preferred employers are concerned, the survey also finds very diverse attitudes towards working for large organisations versus small companies.  A higher salary and faster growth prospects are more important than company size for respondents in Australia, Hong Kong and Singapore, whereas stability and size matter most in India and South Korea.

Value family and social life, but mixed behaviour towards health

Throughout the region, under-40 adults take very few risks with their family and social life, both of which they clearly value more than their careers.  

On the health front, respondents from more advanced economies tend to be less concerned about health risks than their counterparts in India, China and Malaysia.  For instance, respondents from Japan and South Korea are more inclined towards getting regular medical check-ups than they are to eating healthily or doing regular exercise. In comparison, respondents from Malaysia, China and India emphasise both medical check-ups and self-discipline.

Swine flu calls for review of insurance policies

In light of the recent outbreak of swine flu (HIN1), Swiss Re added a mini survey to study how under-40 adults in Australia, China, Hong Kong and Singapore have reacted to this threat.

Perhaps due to their experience with SARS, the majority of respondents from Hong Kong, Singapore and China believe their chance of catching an infectious disease is higher this year than last year. They are generally well prepared for this eventuality, and are likely to stop travelling in the event of an influenza pandemic.

A high proportion of respondents from Singapore, China and Hong Kong said they will review their insurance cover to see whether it is adequate. By contrast, Australian consumers seem to be less concerned and less responsive to swine flu

“For the insurance industry, the high number of respondents in Singapore, China and Hong Kong who are looking to review their policies clearly presents an emerging business opportunity. The swine flu represents a change in the risk landscape facing consumers, many of whom want to revisit their own approach to risk management,” Mr Wong commented.

Business risk attitudes

SMEs are still willing to take risks for growth……  

The second part of the Swiss Re survey, which looked specifically at 20 to 40 year-old managers and leaders in Asia-Pacific’s SMEs, found that SMEs in China and India are more likely than their developed market counterparts to consider the current financial crisis as an opportunity to grow their business. In context of the currently difficult market conditions, organic growth is preferred to acquisitions across the region, and in addition there is little interest in expanding into new products or business lines.

Most respondents, particularly among China’s SMEs, will still take out a loan if it could help to grow their business quickly. In addition, around half of all respondents are willing to risk losing capital for higher profit when considering a business opportunity.

Mr Wong said: “Overall, SME respondents from China have the highest risk appetite for growth, followed closely by Singapore, Australia, Hong Kong and other markets. It is therefore important to note that even under current extremes of financial stress and heightened business uncertainty, SMEs as the powerhouse of many Asia-Pacific economies have not completely forsaken the chance or intent to grow their businesses.”

……but are very cautious about operational risks

In terms of day-to-day operations, respondents in all markets show a consistently low risk tolerance, with most expressing strong support for managing operational risks in such areas as information security, maintenance and safety of plant and premises, environmental policies and human resources. 

However, given a limited budget, respondents would give highest priority to staff retention and the lowest to protection against third-party liability or adopting good environmental policies.

This willingness to take calculated risk for company growth, while adopting a very cautious approach to operational risks is reflected in the consolidated BAFRI values, ranging from 27.6 in India to 37.5 in Australia, indicating rather low appetite for business risks across the board.

Notes to editors

About the survey

The Swiss Re Survey of Risk Appetite: Asia Pacific 2009 was conducted in the first quarter of 2009, covering eight markets, namely Australia, China, Hong Kong, India, Japan, Malaysia, Singapore and South Korea. The overall sample captured 3,900 urban working consumers between 20 and 40 years old with quotas set by gender, age and parenthood; as well as 800 SME decision-makers of the same demographic with quotas set by company size. Respondents were contacted online, over the phone or in person depending on the market.

An additional mini survey on attitudes to the swine flu outbreak was conducted in May 2009, involving 400 consumers in Australia, China, Hong Kong and Singapore.  

The full survey report will be distributed to selected Swiss Re clients and is available to journalists on request.  It is not published on Swiss Re’s website.


The Consumer Appetite for Risk Index (CAFRI) and Business Appetite for Risk Index (BAFRI) provide useful insights into the overall level of risk appetite of a defined population and facilitate cross-market comparison. Both indices range from 0 to 100. The lower the index value, the more risk averse the respondent group is. A continuum from extreme risk aversion (value of 0) to extreme risk-taking (value of 100) implies risk neutrality at around the middle of this range.

The CAFRI is an average score of respondent ratings on 15 statements grouped under four consumer risk aspects: finance, career, health and lifestyle, with equal weights being applied to all these aspects.  Similarly, the BAFRI is an equal-weighted average score of respondent ratings on ten statements grouped under two business risk aspects: growth and operation.

About Swiss Reinsurance Company Ltd

Swiss Re is a leading and highly diversified global reinsurer. The company operates through offices in more than 20 countries. Founded in Zurich, Switzerland, in 1863, Swiss Re offers financial services products that enable risk-taking essential to enterprise and progress. The company’s traditional reinsurance products and related services for property and casualty, as well as the life and health business are complemented by insurance-based corporate finance solutions and supplementary services for comprehensive risk management. Swiss Re is rated “A+“ by Standard & Poor’s, “A1” by Moody’s and “A” by A.M. Best.

Swiss Re has been associated with Asia since 1913 and now has about 1,000 staff in Asia-Pacific. The company's Asian headquarter is in Hong Kong.