For the CEO

In brief:The Philippines must strategically adopt AI, robotics, and emerging technologies to close labor gaps and boost productivity in sectors such as healthcare, BPO, and agriculture.Human-machine collaboration will transform workforce dynamics, lengthening careers and demanding continuous reskilling. Strong governance, ethical safeguards, and ongoing investment in digital infrastructure are vital for inclusive growth and regional competitiveness. “The success of the human-machine hybrid economy will depend on coordinated action across government, industries, and labor markets."Emerging technologies are rapidly transforming the global economy, from artificial intelligence (AI) to brain-computer interfaces (BCIs) to longevity research. These advances are redefining the very nature of work beyond simply enhancing human capabilities. C-suite leaders are increasingly operating in what can be described as a NAVI risk environment — non-linear, accelerated, volatile, and interconnected — where multiple disruptive forces are shaping the global operating environment, including climate change, technological innovation, demographic shifts, and the rising influence of non-state actors. These intersections between primary forces create megatrends, identified as global, cross-sector scenarios that shape how organizations operate, compete and create value.The EY Megatrends 2026 report explores eight megatrends at the global macro level and highlights how each one can evolve in different sectors. The superfluid enterprise infrastructure explored in the previous article discusses how autonomous systems create the foundation for human-machine collaboration at scale. While superfluid enterprises eliminate organizational friction, the human-machine hybrid discussed in this article explores how new technologies will enable humans to expand their capabilities. Augmenting human potentialRecent policy directions from the Department of Information and Communications Technology (DICT) and National Economic and Development Authority (NEDA) between 2025 and 2026 highlight a growing recognition that digital transformation is no longer optional but foundational. AI is already streamlining data analysis, predictive modeling, and complex decision-making across industries. In the banking sector, major banks have expanded AI-driven fraud detection systems, significantly reducing transaction risks while improving customer trusts.Early-stage BCIs, though still largely experimental, are being explored in academic settings like the University of the Philippines for neurorehabilitation research. These initiatives suggest a future where Filipino workers may interact with machines through neural interfaces, particularly in healthcare and assistive technologies.Simultaneously, AI-driven longevity research is reshaping expectations about working life. According to a 2026 study by the Philippine Institute for Development Studies (PIDS), life expectancy improvements combined with better health technologies could extend productive working years by up to a decade. This creates both opportunities and tensions in labor market planning.The Philippine labor paradoxThe Philippines faces a demographic paradox: a young workforce grappling with underemployment alongside an aging population needing extended productivity. As of 2025, youth underemployment remained above 14%, while demand for high-skill roles surged, as reported by the Philippine Statistics Authority.This mismatch is particularly evident in the IT-BMP sector, where companies report shortages in AI specialists and data engineers despite a surplus of graduates. Human augmentation technologies can help bridge this divide. For instance, AI-assisted coding platforms are enabling entry-level programmers to perform advanced tasks, effectively compressing the skills gap.Opportunities here and thereHealthcare stands to benefit enormously from hybrid technologies. AI-powered diagnostic tools are being piloted in rural clinics where access to specialists are limited. These systems assist doctors in identifying conditions such as tuberculosis and diabetic retinopathy with higher accuracy according to the Department of Health pilot programs (2025). Robotic-assisted surgery, though still concentrated in urban centers like Metro Manila, is improving surgical precision and reducing recovery times.In the business process outsourcing (BPO) industry, AI is both a disruptor and an enabler. BPO companies are integrating generative AI into customer service workflows, allowing agents to handle more complex queries while automating routine interactions. According to the IT & Business Process Association of the Philippines (IBPAP) 2026 outlook, hybrid human-AI teams could increase productivity by up to 30%.Agriculture, traditionally slower to adopt to technology, is also evolving. Precision farming tools using technology such as drones and satellite data are being deployed in rice-producing regions such as Nueva Ecija and Ilocos Norte. These tools help farmers optimize irrigation, predict yields, and reduce input costs.Workforce transformation and longevityLonger working lives demand a fundamental shift in career development models. Filipinos may increasingly engage in multi-stage careers, transitioning across industries as technology evolves. Government programs like DICT’s “Digital Workforce 2025” initiative are expanding reskilling efforts, focused on AI literacy, cybersecurity, and data analytics.Longevity also impacts social protection systems. In September 2025, the Social Security System (SSS) implemented a landmark Pension Reform Program (PRP) designed to support Filipino retirees amidst increasing life expectancy and rising living costs. Aiming to maintain the purchasing power of elderly citizens, the PRP provides guaranteed, multi-year pension hikes across three tranches.Sustainability and technologyHuman augmentation technologies can also support sustainability goals. AI-driven energy management systems are being implemented in manufacturing hubs to reduce electricity consumption, aligning with the Philippines’ commitments under international climate agreements. In healthcare, optimized resource allocation through AI reduces waste and improves service delivery.Regionally, competition is intensifying. Countries like Singapore and Vietnam are investing heavily in AI and robotics. Singapore’s National AI Strategy 2.0 (updated 2025) and Vietnam’s aggressive digital workforce programs highlight the urgency for the Philippines to accelerate its own investments or risk losing competitiveness in key sectors like BPO and manufacturing.Regulatory and ethical challengesThe adaptation of human-machine hybrid systems introduces complex regulatory and ethical issues. Data privacy remains a central concern, particularly with sensitive data such as neural signals in BCI application. The National Privacy Commission has begun drafting updated guidelines for AI governance (2026), emphasizing transparency, accountability, and user consent. Another challenge is equitable access. Without targeted policies, advanced technologies could widen inequality between urban and rural areas. Infrastructure gaps, particularly in broadband connectivity, must be addressed to ensure inclusive adoption. On the other hand, liability in hybrid systems also requires clarity. If an AI-assisted medical diagnosis leads to an error, determining responsibility between human practitioners and machine systems is legally complex. Policymakers must establish clear frameworks to address such scenarios.Partnerships will be crucial when drafting policy frameworks and other regulations. Collaboration between academia, government, and private sector stakeholders can accelerate innovation. Equally important are workforce policies. Voluntary enhancement frameworks, that is, ensuring that workers are not coerced into adopting augmentation technologies, will build trust as a starting point. Continuous training programs must be institutionalized, not treated as one-off interventions.A defining opportunityThe success of the human-machine hybrid economy will depend on coordinated action across government, industries, and labor markets. If managed effectively, the hybrid economy can deliver higher productivity, safer workspaces, and more resilient growth, ensuring that technological progress benefits all Filipinos rather than a select few.The next article in this Megatrends series will discuss the concept of the productivity reset, which redefines value when traditional metrics no longer apply.Warren R. Bituin is the Technology Consulting Partner of SGV & Co.This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.

In brief:Organizations must shift from reactive risk management to proactive, forward-looking strategies.Embedding compliance and integrity into core business decisions drives resilience and long-term value.Strengthening cybersecurity, third-party governance, and speak-up culture enhances risk visibility and mitigation.“In an environment defined by rapid change and uncertainty, organizations must take a more integrated and forward-looking approach to risk management."In today’s non-linear, accelerated, volatile and interconnected business landscape, risk is no longer just a threat — it can also serve as a driver for growth. Leading organizations are capable of actively identifying risk through in-depth risk assessment frameworks, implementing effective countermeasures, and making risks more manageable when they occur. However, this is only one side of the coin. There are also unseen risks that organizations are unable to anticipate and prepare for, such as the recent US-Iran conflict, which resulted in disruptions of global supply chains, economic instability, and oil shortages. Another example of an unexpected risk is the COVID-19 pandemic, which reshaped working conditions and forced organizations to rapidly adapt. These risks were discussed in the recent SGV thought leadership forum, “Transforming Risk into Strategic Advantage,” held on 6 May 2026, where industry leaders discussed how businesses can convert emerging risks into drivers of long-term value.The modern Philippine risk landscape In June 2025, Ernst & Young (EY) conducted a survey across 300 executives (mostly with Compliance and Risk Management roles) across different industries and identified ten key areas that pose a major risk to the current business landscape. It identified data privacy and cyber security breaches (41%), sanction risk (38%) and AI governance (34%) as the top three threats to organizational compliance and integrity. Over 70% of respondents identified data privacy and cybersecurity as critical risks due to the increasing data privacy concerns brought by technological disruption and the growing sophistication of cyberattacks. This is followed by risks posed by regulatory non-compliance (50%), stemming from the increasing complexity of regulatory requirements and potential penalties. Lastly, emerging regulatory requirements related to sustainable operations and environmental, social, and governance (ESG) factors (35%) are affecting operating models and organizational reputation. Surprisingly, corruption risk was ranked tenth in the survey at (15%), the lowest among the ten key risk areas.Compliance as a business enablerTo keep up with the current changes in the regulatory landscape, some organizations have chosen to take a transformative approach. Transformative organizations link compliance efforts with core business functions to drive growth from identified risks. This enables better aligned business outcomes, where risk insights guide decision-making, improving responsiveness to emerging threats and the ability to turn compliance from a cost center to a value-generating function. Modernization is a key factor in keeping up with the regulatory landscape, with organizations actively investing in artificial intelligence (AI) to aid compliance functions. This enables the automation of routine compliance tasks, risk detection through complex pattern recognition, and the automation of due diligence and background checks. Organizations can also leverage AI for more complex functionalities, such as the generation of cross service insights that can be used to make informed strategic decisions and promote growth.Organizations can assess the potential impact of risk and implement controls and response actions to mitigate negative effects through effective risk management strategies. However, they must shift from a reactive to a proactive approach by establishing controls that detect risks early and enable timely intervention. Cybersecurity: Detection of lurking security threatsA critical example of this necessary shift to a proactive approach is the risk area of cybersecurity. A threat actor only needs to find a weakness in any system to breach an organization’s defense, such as an unpatched vulnerability or a payload disguised as a friendly email. In addition, modern and more sophisticated cyber threats often infiltrate systems quietly and remain undetected for months. These attackers study an organization’s security before launching a more devastating attack, making it critical to invest in detection and response as much as deterrence. Cyber compromise detection is one such proactive approach for the organization to identify threats. Investigators using specialized tools collect telemetry data from the organizations system to identify indicators of compromise that may signify the presence or a lurking threat. Through this continuous monitoring, organizations can detect, contain and respond to threats early, minimizing damage and in turn strengthen cyber resilience.Managing third-party risk: A critical blind spotThird-party entities play a major role in the day-to-day business operations. They allow organizations to allocate more resources to develop core competencies by outsourcing expertise, staff training, specialized assets, and even allowing risk transference. Engaging with third parties can increase quality of service while reducing costs.These advantages, however, come with additional risks. Corporate integrity may be compromised when engaging third parties with poor conduct. Organizations may suffer reputational damage, while a compromised third party may exploit policy loopholes, engage in acts of bribery and give kickbacks to gain better deals. This can lead to loss of consumer trust, financial loss, regulatory penalties, and diminished investor confidence. Organizations must therefore conduct due diligence on third party vendors to mitigate both short- and long-term risks. This includes rigorously investigating adverse media reports, litigation records, financial stability, sanctions exposure, and compliance history. Extensive due diligence can also uncover potential areas of concern, such as undisclosed shareholders, falsified information, accounting irregularities, and process irregularities. A layered approach combining public data, stakeholder feedback, and on-site reviews helps ensure that partners align with organizational values and compliance expectations.Building a speak-up cultureA strong speak-up culture detects risk early while strengthening trust and accountability. Whistleblowing platforms are a major contributor to uncovering misconduct and unethical behavior by allowing employees to report them when observed. According to the latest survey by the Association of Certified Fraud Examiners, 43% of fraud cases are detected through whistleblowing. However, the ineffective implementation of whistleblowing frameworks can expose the whistleblower to retaliation from peers and senior management. A failure to quickly respond to whistleblower reports can make employees feel unheard and neglected, while an indifference to upholding integrity by upper management may increase hesitation to speak up. This can lead to employees losing faith in the system and make the unfortunate decision of turning a blind eye to unethical behavior. Employee trust cannot effectively be built when there is a clear gap between what the leaders say and do. General counsel officers (GCOs), Chief Compliance Officers (CCOs), and other members of senior management must set the tone for promoting and demonstrating integrity with ethical leadership. This fosters a culture of trust, transparent communication, and psychological safety for employees. Organizations should also raise awareness and clearly communicate the importance of integrity and compliance. Though conventional training methods may not be enough, role-specific training can better cover how policies directly apply to certain job roles. In addition, AI has proven to be a useful tool that helps employees navigate an overwhelming volume of policies. These technological innovations improve the overall awareness and understanding of employees and support ethical decision-making.The path forward: From risk to valueLeaders today face a fundamental shift: the question is no longer whether risks exist, but whether they are ready for those they cannot yet see and anticipate. In an environment defined by rapid change and uncertainty, organizations must take a more integrated and forward-looking approach to risk management. This means embedding compliance into the heart of strategic decision-making, enabling faster and more effective responses to emerging threats. It also requires investing beyond traditional cybersecurity defenses — building robust detection and response capabilities that allow for proactive mitigation of incidents. At the same time, stronger oversight of third parties through rigorous monitoring, screening, and governance has become essential. Above all, organizations must cultivate a culture of integrity, where leaders set the tone from the top and consistently align words with actions, closing the gap between what is said and what is done.Roderick M. Vega is the Forensic and Integrity Services Leader, and Rhaniel Robert T. Sy is a Forensics Manager, both of SGV & Co.This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the authors and do not necessarily represent the views of SGV & Co.

Insurers have a unique opportunity to drive innovation and growth by addressing protection gaps in the market. In the Philippines, growth in the country’s insurance penetration rate is at 1.89% in the first quarter this year from 1.78% in the same period in 2024. While the momentum is expected to carry throughout the remainder of the year, it is still below the global rate of 6%. As reflected in the insurance premium expense of each Filipino at P1,094.94 from P965.56, insurance density of the country also improved by 13.4%. Per Statista, the insurance industry’s forecast in Southeast Asia could grow by 3.5% annually until 2029. This optimistic forecast is attributable to the global silver tsunami expected to triple by 2050. he "silver tsunami" refers to the significant demographic shift as the Baby Boomer generation reaches retirement age, which will drive demand for financial planning services, life insurance, and health insurance with integrated wellness programs.Despite promising growth, geopolitical tension and trade wars are also expected to result in economic shocks this year, requiring strategic and operational flexibility from insurers. Coupled with increasing risks from cyber threats, climate change, and demographic shifts leading to a growing retirement savings gap, insurers are called to rethink their strategies. testAccording to the 2025 Global Insurance Outlook, significant protection gaps exist, particularly in cyber and climate-related risks, where a staggering 99% of cyber losses and 60% of natural disaster losses remain uninsured, according to insurance company Munich Re’s Cyber Survey 2024 and research publication Swiss Re Sigma, respectively. In 2024, the World Bank reported that natural disasters shed $3.5-billion Philippine assets yearly while direct losses to both public and private assets have reached more than 1% of the gross domestic product (GDP). Additionally, the growing retirement savings shortfall presents further avenues for value creation. A strategic focus on enhanced data utilization and modernized technology is essentia