FORERUNNER IN ACCOUNTING AND RISK STANDARDS

Sampath Thushara has over 18 years of experience in the areas of finance, accounting and general management, with exposure to the audit and assurance, apparel, telecommunications, manufacturing and insurance sectors.

Given his deep knowledge of accounting standards and hands-on experience in insurance, he is known for the adoption of IFRS 17 (insurance contracts) in the insurance sector. Thushara is also the Chairman of the Finance Technical Sub Committee (FTSC) of the Insurance Association of Sri Lanka (IASL).

Q: How do you see the relevance of lean in the finance field and how do you align it with your sustainability goals?

Sampath Thushara (ST): Sustainability is about meeting today’s goals without compromising the future. The UN Sustainable Development Goals (SDGs) that are relevant to our business are embedded in our DNA, and part of our environmental, social and governance (ESG) strategy.

Two pillars of our ESG strategy are sustainable operations and sustainable investments, which focus on improving efficiency and eliminating waste through process improvements and renewable resources.

To achieve these goals, AIA Sri Lanka has embarked on a lean journey that introduces lean philosophy to its finance and actuarial functions as a pilot project. AIA Sri Lanka takes pride in pioneering lean practices in the insurance and finance fields in Sri Lanka.

We are adopting lean in finance and actuarial functions to inculcate the philosophy into finance culture through structured roll out programmes and continuous improvement initiatives. The expected direct benefits include an improved financial position, efficient processes, value creation for customers, as well as agile, flexible and optimal cost structures, providing room for growth.

It will also enable us to redirect capital to more productive areas. Based on the success and learnings of the pilot project, we plan to roll it out organisation-wide.

We’re excited to challenge our status quo and transform our processes to ensure our financial position is sustainable.

Q: How successful has AIA Sri Lanka’s IFRS 17 adoption journey been?

ST: AIA is once again a pioneering insurance company in adopting this standard well before its effective date in Sri Lanka. It is also positioned as the only life insurance company to have fully adopted IFRS 17 in the country.

The new standard will come into force in Sri Lanka on 1 January 2025. Until then, we will maintain two sets of books that align with IFRS 4 to follow local regulatory requirements and IFRS 17.

IFRS 17 is considered one of the most rigorous and complex accounting standards as there was no such principle-based, comprehensive accounting standard for insurance contracts before. With the new accounting standard, profit drivers can be clearly identified and provide significant room for analysts to understand a business’ performance.

Moreover, IFRS 17 will bring all insurers onto one platform and standardise insurance reporting in the global and local insurance sector, equipping investors to make informed investment decisions.

In its role as the only insurer and forerunner in implementing IFRS 17 in Sri Lanka, AIA extends an invitation to the rest of the sector and the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka), offering support and sharing our experience in its implementation.

Over the course of his 22 year career, Hasitha Mapalagama has accumulated more than 14 years of experience in the life insurance sector, specialising in risk management, compliance and internal auditing. He’s an experienced and collaborative expert in risk management and compliance. During the acquisition of AIA Sri Lanka by AIA Group, he led the integration of the local compliance function with AIA Group Compliance.

Q: What are the latest updates or trends in risk management? How do you plan to keep AIA Insurance at the forefront of these developments?

Hasitha Mapalagama (HM): The risk landscape is rapidly changing due to technological advancements and digitalisation, requiring more agility in responding to changes. In addition to managing conventional risk management topics such as financial, operational and strategic risks, greater prominence is given to the latest updates in the risk management arena.

These are a few of them.

  •  Cybersecurity risk management

With the increased threat of cyber-attacks, organisations are focussing more on cybersecurity risk management. This includes implementing strong security measures, conducting frequent risk assessments and developing incident response plans to mitigate the impact of potential cyber-threats.

  • Artificial intelligence and data analytics

Risk management heavily relies on advanced data analytics and AI techniques to identify patterns, detect anomalies and make predictions.

  • Operational resilience

Companies are placing greater focus on operational resilience, which involves the ability to adapt and recover from disruptions.

  • Environmental, social and governance

Risk management now includes the assessment and management of factors such as climate change, stakeholder relationships and regulatory compliance, which are integrated in the ESG framework.

  • Third party management

As companies increasingly rely on third party vendors, effective management of third party risk has become crucial. Organisations are implementing robust due diligence processes, monitoring performance and ensuring compliance with relevant regulations to mitigate third party risks effectively.

AIA Insurance has a robust risk management framework that aligns with all mandatory and other risks originating from the external and internal environments. We prioritise continuous learning and education on emerging risk management trends and best practices.

Furthermore, our dedicated risk management function is staffed with highly skilled risk management specialists who are subject matter experts, and take responsibility for analysing emerging risks, regulatory changes and industry trends.

We also foster collaboration and knowledge sharing across all 18 AIA markets. And we regularly review and update our risk management framework by revisiting risk appetites, risk assessments, monitoring techniques and response plans to ensure their ongoing effectiveness in the face of new challenges.

Q: How does AIA’s risk management strategy set the company up for success?

HM: At AIA Insurance, our risk management strategy is meshed with the overall business strategy. This enables us to identify risks that prevent us from achieving the business strategy so that it can be aligned to mitigate risks.

In summary, our well-executed strategy enables us to proactively identify and mitigate risks, make informed decisions, enhance operational efficiency, protect stakeholder interests, ensure compliance, maintain business continuity and build a strong brand reputation. These collective efforts position AIA for long-term success and sustainability in a dynamic and ever-changing environment.

– Compiled by Yamini Sequeira