Generali, UNDP launch joint research to build SME resilience in Asia
Generali and the United Nations Development Programme (UNDP) brought together representatives from the Malaysian Ministry of Finance, Bank Negara Malaysia, the SME Association of Malaysia and the insurance and financial communities to present concrete solutions on how to boost small and medium-sized enterprises (SME) resilience against climate change and other risks.
The event built on the partnership between Generali and UNDP’s Insurance and Risk Finance Facility, designed to reduce the protection gap for vulnerable communities worldwide through access to insurance solutions.
This work aligns to a broader commitment to raise awareness, as well as to set the path for insurance to unlock security, sustainability, and greater resilience for SMEs in developing countries.
Generali is also expanding its flagship SME EnterPRIZE project in Asia, building on the engagement carried out over the past three years with thousands of SMEs from across Europe to celebrate and nurture a culture of sustainability.
A joint research report titled ‘Building MSME Resilience in Southeast Asia’ was launched, focusing on selected value chains in Thailand and Malaysia.
The report proposes an alternative approach to identifying the risks and needs of micro, small and mediumsized enterprises (MSMEs), developing risk management and insurance services, and delivering these solutions to the MSME community.
MSMEs make up the majority of enterprises in Southeast Asia according to the new research, with figures as high as 99.6 per cent in Thailand and 97.4 per cent in Malaysia. They act as both a pillar and a driver of socioeconomic development.
The report finds that SME growth and survival are threatened by a range of risks, including climate change, business interruptions, and limited access to capital markets. These risks are intensified by the lack of risk management, coping mechanisms, and insurance coverage. Fewer than five per cent of MSMEs in Southeast Asia have any form of insurance.
The alternative approach outlined in the research starts by segmenting MSMEs to understand their risk profiles and address their specific needs, exploring priority value chains including natural rubber, food and accommodation, wholesale and retail, and electrical and electronics.
From this MSMEs can build resilience through holistic solutions that consider both risk transfer and risk mitigation tools, and which include bundling insurance solutions with new technologies or digital platforms and leveraging alternative distribution partners to reach MSMEs more effectively.
The research complements the SME EnterPRIZE White Paper developed in the framework of Generali’s flagship initiative to boost a culture of sustainability among SMEs.
Generali and UNDP have also presented their SME Loss Prevention Framework, a digital tool leveraging the power of data to raise the readiness and awareness of SMEs to the risks facing vulnerable communities, starting in Malaysia with the flood risk.
Technical expertise and experience in the field from one of the biggest insurers of the world are at the disposal of local entrepreneurs as a contribution to the transition towards a more sustainable economy.
Hosted on a user-friendly online platform, this framework will also be developed as a mobile app and can be spread to other countries in Asia and in the world. SMEs can find advice on how to protect their activities in the face of climate challenges and other risks, while ensuring the resilience of such an important segment for developing countries also against unpredictable events like natural catastrophes.
Following the launch of the ‘Insurance Innovation Challenge Fund’ in September last year, which aims to incentivise the development of innovative insurance products and services in Malaysia, the event also showcased four innovative solutions for insurance to enhance SME resilience against climate and other risks.
In the upcoming months, finalists will be announced, of which two winners will be awarded up to US $40,000 each, along with technical assistance to support the development of their ideas and the opportunity to leverage Generali and UNDP’s global presence.
Generali chief executive officer Jaime Anchústegui Melgarejo said: “The MSME community in Malaysia, Thailand and the broader Asia region are an indispensable part of the growth and development stories of these markets.
“However, they face very real and intensifying risks from climate change and other factors that are affecting business continuity and their ability to capture emerging opportunities.
“Insurance is at the heart of the solution for making SMEs and MSMEs more resilient and is the driving force behind Generali’s partnership with UNDP. Bringing SME EnterPRIZE to Asia, launching our SME Loss Prevention Framework and progressing our Insurance Innovation Challenge Fund are key milestones in our effort to support vulnerable businesses in Asia. I’m eager to continue our collaboration with UNDP and find new ways to make a lasting impact.”
Generali International-Asia regional officer Rob Leonardi commented: “MSMEs have long been a key driver of growth and innovation in Asia.
“Their contributions to the development of this region are indisputable, yet they are increasingly vulnerable to risks flowing from climate change, geopolitical tensions and market disruptions. Our partnership with UNDP recognises these challenges and is aimed at utilising insurance and risk finance solutions to increase coverage among MSMEs and boost their resilience. The various initiatives are all designed to meet businesses where they are in their journeys and ensure they have access to the solutions they need to thrive.”
UNDP Malaysia resident representative Niloy Banerjee said: “With SMEs making up 48.2 per cent of national employment and 38.4 per cent of GDP, the crucial role they play in the economic ecosystem is beyond doubt.
“Yet they remain most vulnerable to shocks, whether from natural disasters exacerbated by climate change, pandemics or other disruptions to the manufacturing or logistics continuum. We must rapidly support the building of resilience and staying power of SMEs against all foreseeable risks through holistic and innovative instruments and solutions. Insurance would be one of the most significant safety nets for SMEs.”
Generali and the UNDP have partnered to support developing countries with access to insurance and risk finance solutions that enhance the resilience of communities and local businesses.
Under this multi-year partnership, Generali has committed technical and financial resources to UNDP’s Insurance and Risk Finance Facility (IRFF) in order to increase the socioeconomic wellbeing of some of the world’s most vulnerable people and places. The partnership blends Generali’s insurance expertise with UNDP’s long-term focus on financing and development.