This requires urgently strengthening resilience in small- and medium-sized enterprises, it said.

The WTW Risk Benchmarking Survey, which polled 100 companies, more than a third in manufacturing, found almost half (44 per cent) only have a basic understanding or face challenges understanding the risks they face and their financial impacts.

This number increases to 58 per cent when they were asked about emerging or new risks they may face in the next two to five years.

The hindrance to understanding and risk preparedness can be attributed to the lack of relevant empirical data, which 58 per cent of organisations have identified as a potential area of weakness in their risk assessment process.

Close to half (42 per cent) also said they do not have a defined methodology in place to quantify the financial impact of their risks to set appropriate risk management measures, while one quarter (26 per cent) said their organisations do not have a formal process in place to formulate risk appetite or tolerance.

In terms of priorities, companies cited intense market competition (39 per cent) as the top source of risk.

This is followed by macro-economic uncertainty (37 per cent) as a result of the ongoing inflationary pressure and communicable and contagious diseases (35 per cent) as organisations adapt to a post-pandemic business environment.

Luke Ware, head of corporate risk & broking Asia at WTW, said: “What our study has shown is an urgent need to bridge the protection gap in risk impact and its financial implications, and consequentially, to enhance risk preparedness across organisations.

"This is especially important for a market like Việt Nam, one of the most hazard-prone countries in Asia with growing susceptibility to natural catastrophes and climate change impact.

“At the same time, the country is now a global hub for manufacturing and an emerging high-tech centre of excellence, attracting significant foreign investments.”

Việt Nam’s rapid economic growth over the medium term and the shift in global manufacturing supply chains towards competitive Southeast Asian manufacturing hubs like Việt Nam also means that demand for products and services and pricing pressures are the two areas with highest risk, according to the survey.

Nguyễn Mỹ Thiện, country leader and head of corporate risk & broking, Vietnam, at WTW, said: “With SMEs forming the backbone of the economy, Việt Nam is also uniquely placed to take advantage of increasing multinational corporations’ expansion in the country as a result of the ongoing geo-political shift.

“As manufacturing activities ramp up to meet increasing demand, building resilient supply chains is a business critical priority. Insurance has a key role to play in protecting these SMEs from supply chain losses in order to remain attractive to foreign investments.”

Despite the need to enhance risk protection, almost a third of organisations said their conventional insurance products are inadequate in meeting their organisation’s needs as there are some risks that may not be covered or sufficiently considered.

Organisations are also challenged by pricing, with close to half (48 per cent) considering pricing unpredictability and high cost as the major weaknesses of their current insurance products, she said.

“While most organisations recognise the importance of insurance, the challenge now will be to develop an equitable approach that allows them to identify and fill the gaps where they are uninsured or under-insured while at the same time balance the cost of their coverage. Addressing the lack of data to assess the operational risks and their impact will be key to achieving this.” — VNS