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7/28/2019 Rict Team Avb Qn1submission
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TEAM AVB
RiskIntelligenceChallengeTrophy2013
Question1:
GenerationYsinSingaporeincreasinglyvalueglobe-trottingoverthenormof
adegree/diplomaandstartingacareer.Goodorbadmove?
CONTENTS
INTRODUCTION 2
OBJECTIVES 3
RISK APPETITE 5
COST-BENEFIT ANALYSIS 7
OPPORTUNITY & RISK ASSESSMENT 17
FINAL RECOMMENDATION 20
1
B
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1. INTRODUCTION
They are entitled, love instant gratification and lament when work gets dull and boring. The following
characteristics are those of Generation Y, also known as the Millennial Generation. In this report, they
form the target segment of our research.
In determining the scope and focus of our report, we have made several assumptions:
1) Age
Firstly, given there is no fixed age range of the Generation Y, we have defined Generation Y as
individuals below the age of 22. Hence, their education status would be pre-university. It is important to
note that we are focusing on Generation Ys in Singapore.
2) Either-or decision
In addition, we assumed that Generation Ys who have chosen globe-trotting do not pursue a tertiary
education at all. The options of globe-trotting or pursuing a degree and career are thus mutually exclusive.
3) Globe-trotting
Our definition of globe-trotting is travelling for an extended period of time, usually more than a year. This
excludes occasional short trips people take to get away from the hustle and bustle of the hectic city life.
This report intends to assess the riskiness of globe-trotting by Generation Ys through careful analysis of
the risk management framework. Firstly, we intend to define personal objectives of the Generation Ys
while stating any reasonable assumptions as previously mentioned. Next, we will define the risk appetite
of the Generation Ys, followed by a cost-benefit analysis of both globe-trotting and starting a career. We
will also provide the mitigation factors for the risks associated with each decision. Finally, we will
attempt to reconcile the risks for each alternative with the risk appetite of the Generation Y and propose
the optimal solution to maximise benefits while staying within their risk appetites.
2
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2. OBJECTIVES
In order to assess whether globe-trotting instead
of getting a degree and starting a career is a good
or bad decision, we need to first determine the
objectives of Generation Ys. By breaking down
the objectives of our target group, we can then
evaluate whether globe-trotting helps them
achieve or detracts them from life objectives.
2.1MaslowsHierarchyofNeeds
Maslows theory states that there are 5 basic
human needs: Physiological needs, safety needs,
love and belonging (social needs), esteem needs
and lastly, the need of self-actualization. These
needs have to be satisfied and fulfilled in a
progressive manner, suggesting that needs on the
lower levels have to be fulfilled before seeking
higher needs. Physiological needs belong on thelowest level while Self-Actualization is at the
highest level.
Physiological needs are defined as the basic
human requirements for human survival, which
include food and clothing. Safety needs comprise
safety and security, such as health and well-being
of an individual. Moving on, social needs relate to
love and belonging desires, such as the need for
love, friendship and intimacy.
2.2ObjectivesofGenerationYs
2.2.1 Esteem Needs
Esteem needs are defined as the desire to be
accepted and valued by others. This involves
gaining recognition and respect through
occupations and hobbies.
Generation Ys who remain on the fourth level of
the Maslows Hierarchy of Needs are not pursuing
self-actualization. They are more focused on
climbing the social status ladder, accumulating
achievements and attaining respect from peers.
Their current objective is to achieve a higher level
of self-esteem through an illustrious and often
high-paying career. Satisfying esteem needs are
thus a relevant objective of Gen Ys in Singapore.
2.2.2 Self-Actualization
Self-actualization is defined as the desire for self-
fulfillment, namely the tendency for the
individual to realize his potential. In identifying
self-actualization, we will consider a total of 3characteristics: Spontaneity, continued freshness
of appreciation and lastly, increased autonomy.
In a study done by the CIA (Central Intelligence
Agency), Singapore is ranked 6th in the world in
terms of GDP per capita on a purchasing power
parity basis1. It is important to note that our GDP
per capita of US$60,900 is higher than those of
3
1Retrieved from: https://www.cia.gov/library/publications/the-world-factbook/rankorder/2004rank.html
Figure 2.1: Maslows Hierarchy of Needs
https://www.cia.gov/library/publications/the-world-factbook/rankorder/2004rank.htmlhttps://www.cia.gov/library/publications/the-world-factbook/rankorder/2004rank.html7/28/2019 Rict Team Avb Qn1submission
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many other developed nations such as Hong
Kong, United States and Switzerland.
Additionally, Singapore is ranked 25th on the
Quality of Living Survey done by Mercer in 2012
and tops the rankings for the city with the best
infrastructure, which significantly impacts the
standards of living in a country 2.
The high quality of life and GDP per capita of
Singapore thus suggest that most local GenerationYs live in a relatively sheltered household where
they do not have to worry about inadequate living
arrangements. Applying this theory to Generation
Y, the first 3 levels (physiological, safety, social)
are thus achieved. Furthermore, this leads to a
certain sense of entitlement, which in turn reduces
the desire to fulfill esteem needs. As a result, we
have assumed that most Generation Ys would be
seeking to fulfill Maslows last level of needs,
self-actualization.
People travel to take in sights, experience life in a
novel manner, step out of their comfort zones and
perceive things in a new light. They hope to grow
holistically as a person and lead a more fulfilling
and meaningful life. For most, travelling the
world is deemed as one of the most important
things to accomplish in their lifetimes. Noting that
self-actualization describes the desire to
accomplish everything that one can, it can be
assumed that travelling falls into this category.
Globe-trotting is therefore an ultimate objective
of those who have achieved the previous 4 levels
in the hierarchy of needs.
On the contrary, humans can satisfy self-
actualization through their career as well. Having
a career and being passionate about it allows them
to satisfy another component of self-actualization:
Realizing ones full potential. Unfortunately, this
form of self-actualization is delayed as entry level
jobs often entail repetitive and menial duties in
earlier years of a career. Coupled with their desire
for instant gratification, Generation Ys naturally
gravitate towards globe-trotting as an avenue for
self-actualization.
2.2.3 Comparative Standing
After our application of the relevant motivation
theory, we can conclude that one of the objectivesof Gen Ys include globe-trotting as part of self-
actualization. As self-actualization is on a higher
level than esteem needs in Maslows hierarchy of
needs, it is reasonable to say that globe-trotting,
as a pursuit of self-actualization, takes higher
precedence over pursuing a career, which
represents the search for esteem needs.
4
2Retrieved from: www.mercer.com/press-releases/quality-of-living-report-2012
Figure 2.2: Top 10 countries in terms of GDP per Capita
http://www.mercer.com/press-releases/quality-of-living-report-2012http://www.mercer.com/press-releases/quality-of-living-report-2012http://www.mercer.com/press-releases/quality-of-living-report-20127/28/2019 Rict Team Avb Qn1submission
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3. RISKAPPETITE
3.1ScoringSystem
Individuals have varying risk appetites. Generally, the goal is to achieve the objective of the individualwhile staying within the risk appetite of his or her choosing. For this report, we have decided to classify
the risk appetite of the Generation Ys into 3 groups based on 2 criteria: Financial concerns and personal
development. Financial concerns include financial security while personal development consists of self-
actualization and other aspects such as development of critical thinking and analytical skills.
In order to create a basis of comparison for opportunities and risks attached to globe-trotting and pursuing
a degree/career, we will be utilizing a Probability-Impact Matrix, as listed above. Probabilities of
opportunity and risk comprise of Unlikely, Moderate and Likely, encompassing values from 1 to 3
respectively. Similarly, the impact of an opportunity or risk is classified into Minor, Moderate and
Major categories with the same range of values. Multiplication of probability and impact of an
opportunity and risk thus gives us a resultant score, ranging from a minimum of 1 to a maximum of 9.
Considering the above scoring approach, our range of risk appetite will be determined by the maximum
number of risks for both options (Globe-trotting and choosing a degree/career). Having identified 4 risks
of globe-trotting, as compared to 2 risks of the degree and career route, we have thus determined a risk
appetite scale ranging from 1 to 36, given that each risk identified has a potential score of 9.
5
Figure 3.1: Proposed Probability-Impact Matrix
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RISK A PETITE
Category Small Moderate Large
Minimum Score 1 1 1
Maximum Score 12 24 36
3.2SmallRiskAppetite
We will be considering 3 categories of risk appetite of Generation Ys in Singapore. The first segment of
Generation Ys is the most risk-averse, having the smallest risk appetite among all 3 groups. They are
extremely concerned with financial stability and are less concerned with self-actualization. These are the
people who are on the fourth level of the Maslows Hierarchy of Needs, being more preoccupied withpursuing a career and scaling the corporate ladder. As such, we have assigned this group with a risk
appetite range of1 to 12.
3.3ModerateRiskAppetite
The second segment of Generation Ys is identified as being less cautious than the previous segment and
adopts a prudent approach to this dilemma. They are equally concerned about financial security as well as
personal development. As they have a smaller risk appetite, they might be reluctant to risk their careers
for globe-trotting. Their ultimate aim is to achieve both goals while staying within their respective risk
appetite. Consequently, globe-trotting may be deemed as a risky venture while pursuing a career will
enable them to obtain financial security and stable living arrangements. For this group of Generation Ys,
their risk appetite values range from 1 to 24.
3.4LargeRiskAppetite
The last identified segment has the largest risk appetite with an inclination towards personal development.
Generation Ys with big risk appetites will be able to take on larger risks given their high risk tolerance.
They are likely to choose globe-trotting while remaining optimistic about pursuing a career of their choice
after their travels. Hence, they could be said to be more willing to risk not having a career headstart by
travelling when young instead of the conventional route of getting a tertiary education and embarking on
their career immediately after graduation. For this risk appetite category, we have established a riskappetite scale of1 to 36.
6
Figure 3.2: Categories & Ranges of Risk Appetite
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4. COST-BENEFITANALYSIS
In evaluating both scenarios pertaining to globe-
trotting and pursuing a degree/career, a cost-
benefit analysis will be applied in identifying
potential opportunities and risks Generation Ys in
Singapore are exposed to.
4.1Globe-Trotting
Opportunities:
4.1.1 Gaining a Global Perspective
Globe-trotting entails extensive travelling to
different countries and spending considerable
time in each destination. As such, it is highly
probable that a globe-trotting individual would be
exposed to a myriad of cultures from the places
visited. One of the top few reasons cited for
travelling is to experience a different culture. For
example, one in eight German travelers stated that
the opportunity to experience Aboriginal culture
influenced their decision to visit Australia3 .
Therefore, it is reasonable to assume part of a
globe-trotters agenda is to experience different
cultures of different places.
Exposure to foreign cultures may initially breed a
certain degree of culture shock but as the extent
of exposure increases, the transition to
understanding and embracing a foreign culture
will be a natural progression. Individuals will start
to embrace cultural diversities present and
eventually develop a keen appreciation for them.
This is analogous to S.O. Lesser and H.W.S.
Peters Stage Theory of Culture Shock, a three-
stage process of culture shock includes first, a
spectator phase on arrival; second, an
involvement phase when the person can no longer
stand outside the host culture and must become
involved; and third, a coming-to-terms phase
where the visitor learns how to cope in the host
culture 4.
This transition is aided by several factors, namely
sense of place and a host destinations local
cultural expressions. Sense of place refers to
the feelings evoked in people as a result of
experiences and memories associated with a
place5. Living in a foreign community for a
prolonged period grants one a temporary insider
7
3Retrieved from: http://culturaldata.gov.au/publications/statistics_working_group/cultural_tourism/cultural_tourism_statistics
4Retrieved from: http://books.google.com.sg/books?hl=en&lr=&id=zszx6k5Y1HMC&oi=fnd&pg=PR5&dq=top+reasons+for+travelling+the+world+experienc+culture&ots=XL52yEMMBs&sig=W3FCEHueCoZoOn1pZMjRazdDYK8#
5Retrieved from: http://project2225.wikispaces.com/file/view/Place+and+identity+-+a+sense+of+place.PDF
http://culturaldata.gov.au/publications/statistics_working_group/cultural_tourism/cultural_tourism_statisticshttp://culturaldata.gov.au/publications/statistics_working_group/cultural_tourism/cultural_tourism_statisticshttp://project2225.wikispaces.com/file/view/Place+and+identity+-+a+sense+of+place.PDFhttp://project2225.wikispaces.com/file/view/Place+and+identity+-+a+sense+of+place.PDFhttp://books.google.com.sg/books?hl=en&lr=&id=zszx6k5Y1HMC&oi=fnd&pg=PR5&dq=top+reasons+for+travelling+the+world+experienc+culture&ots=XL52yEMMBs&sig=W3FCEHueCoZoOn1pZMjRazdDYK8#http://books.google.com.sg/books?hl=en&lr=&id=zszx6k5Y1HMC&oi=fnd&pg=PR5&dq=top+reasons+for+travelling+the+world+experienc+culture&ots=XL52yEMMBs&sig=W3FCEHueCoZoOn1pZMjRazdDYK8#http://books.google.com.sg/books?hl=en&lr=&id=zszx6k5Y1HMC&oi=fnd&pg=PR5&dq=top+reasons+for+travelling+the+world+experienc+culture&ots=XL52yEMMBs&sig=W3FCEHueCoZoOn1pZMjRazdDYK8#http://books.google.com.sg/books?hl=en&lr=&id=zszx6k5Y1HMC&oi=fnd&pg=PR5&dq=top+reasons+for+travelling+the+world+experienc+culture&ots=XL52yEMMBs&sig=W3FCEHueCoZoOn1pZMjRazdDYK8#http://culturaldata.gov.au/publications/statistics_working_group/cultural_tourism/cultural_tourism_statisticshttp://culturaldata.gov.au/publications/statistics_working_group/cultural_tourism/cultural_tourism_statistics7/28/2019 Rict Team Avb Qn1submission
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status whereby the globe-trotter learns to abide by
a communitys behavioral codes and thus
conceive shared memories. By developing a
sense of place, the globe-trotter overcomes the
initial stage of culture shock and enters the
second, involvement stage and third, coming-
to-terms stage. He learns the ropes of a
community and its culture, acquiring a deep sense
of why and how the foreign communitys outlook
on issues is the way it is.
Present within a foreign community are also
cultural expressions, objects which express a
local communitys culture and identity6 .
Examples include architecture, art, texts and
fashion. These objects convey the history, culture
and identity of a foreign land. A globetrotter has a
readily available source of such cultural
expressions and will consciously and
subconsciously immerse himself in them. This
constant cultural immersion further promotes
cultural assimilation of the globetrotter. Having
more profound understanding of a foreign culture
also helps him to reason from that cultures point
of view.
Through assimilating a foreign culture andunderstanding it, globe-trotters will develop a
more holistic perspective, incorporating the
variety of cultures they have encountered. This
Global Perspective encompasses the assortment of
perspectives derived from an individuals
cultural tutelage and contains a wide spectrum
of views, which allows one to approach any
situation with a more all-rounded framework.
Without extensive travelling and immersing in
different cultures for a substantial time, it is
impossible to develop such a worldly perspective
and thus puts globe-trotters at a larger advantage
compared to non-globe-trotters.
4.1.2 Self-Actualization
According to Maslows Hierarchy of Needs, self-
actualization serves as a motivation for globe-
trotting. Through globe-trotting, an individual is
able to potentially become a self-actualizer with
the following key defining characteristics:
Spontaneity, continued freshness of appreciation
and increased autonomy7.
Spontaneity is defined as extending creativity into
everyday activities, being engaged and
spontaneous. Being a globe-trotter presents
abundant opportunities to achieve all of the
above. Uncertainties are a common occurrence
while travelling, from unpredictable weather to
unforeseen political turmoil. Each uncertainty can
be converted into an opportunity with creative
problem-solving. Globe-trotting allows one to
exercise such creativity and also be spontaneous
in participating in different activities such as
trying exotic cuisines.
8
6Retrieved from: http://books.google.com.sg/books?hl=en&lr=&id=VBXvvo4Vo-oC&oi=fnd&pg=PR14&dq=held+et+al+transformationalist
+1999&ots=hXymUgug99&sig=OgzI-IdhpoiK5HjrZXVH8rtilZo#v=onepage&q=held%20et%20al%20transformationalist%201999&f=false
7Coon, D, & Mitterer, J.O.,An Introduction to Psychology: Gateways to Mind and Behavior (Cengage Learning, 2007), 479.
http://books.google.com.sg/books?hl=en&lr=&id=VBXvvo4Vo-oC&oi=fnd&pg=PR14&dq=held+et+al+transformationalist+1999&ots=hXymUgug99&sig=OgzI-IdhpoiK5HjrZXVH8rtilZohttp://books.google.com.sg/books?hl=en&lr=&id=VBXvvo4Vo-oC&oi=fnd&pg=PR14&dq=held+et+al+transformationalist+1999&ots=hXymUgug99&sig=OgzI-IdhpoiK5HjrZXVH8rtilZohttp://books.google.com.sg/books?hl=en&lr=&id=VBXvvo4Vo-oC&oi=fnd&pg=PR14&dq=held+et+al+transformationalist+1999&ots=hXymUgug99&sig=OgzI-IdhpoiK5HjrZXVH8rtilZohttp://books.google.com.sg/books?hl=en&lr=&id=VBXvvo4Vo-oC&oi=fnd&pg=PR14&dq=held+et+al+transformationalist+1999&ots=hXymUgug99&sig=OgzI-IdhpoiK5HjrZXVH8rtilZohttp://books.google.com.sg/books?hl=en&lr=&id=VBXvvo4Vo-oC&oi=fnd&pg=PR14&dq=held+et+al+transformationalist+1999&ots=hXymUgug99&sig=OgzI-IdhpoiK5HjrZXVH8rtilZohttp://books.google.com.sg/books?hl=en&lr=&id=VBXvvo4Vo-oC&oi=fnd&pg=PR14&dq=held+et+al+transformationalist+1999&ots=hXymUgug99&sig=OgzI-IdhpoiK5HjrZXVH8rtilZo7/28/2019 Rict Team Avb Qn1submission
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Continued freshness of appreciation will also be
honed by globe-trotters in which they constantly
demonstrate appreciation of lifes basic goods.
Globe-trotting requires one to pack only the
essentials and survive on them, through different
terrains and environments. As such, it is common
to see globe-trotters being easily contented with
the bare essentials of life having food and
shelter.
The hallmark of increased autonomy is that self-
actualizers tend to be resourceful and
independent. Living alone in a country with
limited funds and access to family and friends
forces one to become increasingly independent as
well as resourceful by overcoming
disadvantageous situations with the available
resources on hand. Over time and repeated
handling of such situations, it can be expected that
a globe-trotter emerges more resourceful and
independent.
4.1.3 Financial Management
Globe-trotting is undoubtedly expensive and more
often than not, travelers have to manage their
finances carefully and plan their budgets properly.
An estimated cost of travelling the world for a
year is USD$20,0008 . This figure is an
approximation if the globe-trotter travels to
Western Europe and North America amongst
other destinations. This cost is however subjective
and exact travel costs differ for each individual.
Factors such as spending habits, itinerary and
destination come into consideration when
computing the budget.
Given the sizeable monetary amount required to
globe-trot, it is imperative that a globe-trotter
manages his finances wisely, by resisting
temptations to splurge and acting on the age-old
adage of saving for a rainy day, such as cases
of emergencies. This careful and tedious process
of budgeting inculcates a strong discipline in
managing personal finances and will undoubtedly
prove to be a valuable life-skill to have.
4.1.4 Discovering Passion
Globe-trotting provides one an unparalleled
opportunity to have substantial quiet-time to
ponder and reflect on ones interests and passions.
According to Karl Haigler and Rae Nelson,
education-policy experts and co-authors of The
Gap Year Advantage, students who have taken a
gap year reported feeling more focused and
having a clear sense of purpose upon returning
from a gap year9. Similar to a gap year, globe-
trotting provides an opportunity for one to
experience different cultures and a chance to work
9
8Retrieved from: http://twenty-somethingtravel.com/2012/02/cost-travel/
9Retrieved from: http://www.time.com/time/magazine/article/0,9171,2015783,00.html
http://www.time.com/time/magazine/article/0,9171,2015783,00.htmlhttp://twenty-somethingtravel.com/2012/02/cost-travel/http://www.time.com/time/magazine/article/0,9171,2015783,00.htmlhttp://www.time.com/time/magazine/article/0,9171,2015783,00.htmlhttp://www.time.com/time/magazine/article/0,9171,2015783,00.htmlhttp://twenty-somethingtravel.com/2012/02/cost-travel/http://twenty-somethingtravel.com/2012/02/cost-travel/7/28/2019 Rict Team Avb Qn1submission
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in geographically-specific occupations. Through
the aforementioned opportunities, one can
increase his chances of discovering his passions
and interests.
In comparison, getting a degree and finding a job
means much of ones exposure to activities is
constrained by ones chosen field of
specialization. For example, Singapores
emphasis on being the regional financial and
commodities hub mean that societal expectations
often steer undergraduates passion towards the
financial service. Not surprisingly, many
Singaporean undergraduates preferred banking
and financial services as the first career choice
upon graduation, as indicated by the Employers of
Choice Survey 2012 carried out by JobsCentral10.
Since ones passion is influenced by societal
expectations and the economic direction of a
country, it is rare to see an undergraduate
pursuing anything non-career or non-
academically related.
Through globe-trotting, these societal
expectations are temporarily relieved and one has
the freedom to pursue what truly interests him and
in the process, discover genuine passions. Alongwith a global perspective, the exposure to cross-
national activities will beget exploration and
reignite a curiosity in life. Therefore, globe-
trotting is essential to discovering ones passions
in life and formulate a renewed certainty in ones
life.
Risks & Mitigation:
4.1.5 Opportunity Costs
A major risk involved with globe-trotting is the
opportunity costs arising from spending a
prolonged period of time abroad. The most
substantial and damaging opportunity costs are
low employability and reduced career
opportunities.
Without a degree or diploma, a globe-trotter
misses out on the knowledge, skills and business
connections his peers with a tertiary education
would attain. Academic rigor offers training in not
just a subject matter but also skills essential to a
more professional occupation such as analytical
and communication skills. Comparatively, a
globe-trotter is at a competitive disadvantage
compared to his peers as he lacks formal training
in these areas. This lowers his employability and
poses a stumbling block to his future career upon
ceasing globe-trotting.
Career opportunities are also significantly fewer
due to a lack of tertiary education. Most
professional entry-level jobs require at least a
diploma and globe-trotters would unfortunately
fall under expectations. The lack of career
opportunities severely limits employment options
a globe-trotter can take up. This results in
significantly lower pay in a lifetime of a globe-
trotter. The Department of Education's National
Centre for Education Statistics (NCES) in the
United States has mentioned that since the
mid-1980s, education has played a large part in
10
10Retrieved from: http://jobscentral.com.sg/survey/eoc/download_path.php
http://jobscentral.com.sg/survey/eoc/download_path.phphttp://jobscentral.com.sg/survey/eoc/download_path.phphttp://jobscentral.com.sg/survey/eoc/download_path.php7/28/2019 Rict Team Avb Qn1submission
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potential wages, with bachelors-degree holders
taking home an average of 38% more than those
with only a high school diploma. In 2002, the US
Education Resources Information Centre
projected that non-degree holders could expect a
lifetime average of $1.2 million, while those with
a bachelor's degree could expect to earn $2.1
million, or nearly double11.
Mitigation:
It can be argued that globe-trotters gain valuable
life lessons which cannot be acquired without
travelling. Globe-trotters attain a more acute sense
of practicality as they are usually forced to be
realistic about their needs and focus on surviving
on a budget. In addition, they will be honing their
interpersonal communication skills through
constant interactions with different people. As
some countries may not adopt a common
language such as English, a globe-trotter has to
learn to communicate effectively in a different
language. With the advent and proliferation of
online tertiary learning platforms such as
Coursera, globe-trotters can easily engage in
online learning. As a result, they may not
necessarily be lacking in subject-matter
knowledge and analytical skills compared to their
degree-pursuing peers.
4.1.6 Financial Burden
The most immediate risk of globe-trotting is the
accompanying financial burden. As discussed
earlier, globe-trotting rakes up hefty expenditure
and this puts tremendous financial burden on a
family. It is highly unlikely that a typical
Generation Y teenager would be able to finance
his or her own globe-trotting journey and thus, it
is reasonable to assume that parents would be the
main financiers of the entire globe-trotting
process. As previously mentioned, the cost of
travelling the world could be modestly estimatedto be USD$20,000, which is a substantial cost to
bring upon the family. In perspective, according
to the Future on Retirement survey done by
HSBC, the average Singaporean has savings of S
$120,000, in which most of it will be used to pay
off mortgage loans for their flats12. Spending
$20,000 will hence severely diminish householdsavings of globe-trotters.
It may also be economically unwise for a
Generation Y teenager to embark on globe-
trotting in this current period due to the economic
outlook. A study released by McKinsey Global
Institute (MGI) in December 2010 has reported
that interest rates in Singapore were projected to
rise in the next 5 years13. This is due to a surge in
global investment demand encouraged by rapid
emerging market growth. In accordance to the
economic theory of Intertemporal Consumption,
11
11Retrieved from: http://education-portal.com/articles/How_Much_More_Do_College_Graduates_Earn_Than_Non-College_Graduates.html
12Retrieved from: http://www.insurance.hsbc.com.sg/1/PA_ES_Content_Mgmt/content/SGHI/personal/savings/endowment/secureinc/images/
for6_singapore_report.pdf
13Retrieved from: http://business.asiaone.com/Business/News/My%2BMoney/Story/A1Story20101210-252056.html
http://business.asiaone.com/Business/News/My%2BMoney/Story/A1Story20101210-252056.htmlhttp://www.insurance.hsbc.com.sg/1/PA_ES_Content_Mgmt/content/SGHI/personal/savings/endowment/secureinc/images/for6_singapore_report.pdfhttp://business.asiaone.com/Business/News/My%2BMoney/Story/A1Story20101210-252056.htmlhttp://www.insurance.hsbc.com.sg/1/PA_ES_Content_Mgmt/content/SGHI/personal/savings/endowment/secureinc/images/for6_singapore_report.pdfhttp://business.asiaone.com/Business/News/My%2BMoney/Story/A1Story20101210-252056.htmlhttp://business.asiaone.com/Business/News/My%2BMoney/Story/A1Story20101210-252056.htmlhttp://www.insurance.hsbc.com.sg/1/PA_ES_Content_Mgmt/content/SGHI/personal/savings/endowment/secureinc/images/for6_singapore_report.pdfhttp://www.insurance.hsbc.com.sg/1/PA_ES_Content_Mgmt/content/SGHI/personal/savings/endowment/secureinc/images/for6_singapore_report.pdfhttp://www.insurance.hsbc.com.sg/1/PA_ES_Content_Mgmt/content/SGHI/personal/savings/endowment/secureinc/images/for6_singapore_report.pdfhttp://www.insurance.hsbc.com.sg/1/PA_ES_Content_Mgmt/content/SGHI/personal/savings/endowment/secureinc/images/for6_singapore_report.pdfhttp://education-portal.com/articles/How_Much_More_Do_College_Graduates_Earn_Than_Non-College_Graduates.htmlhttp://education-portal.com/articles/How_Much_More_Do_College_Graduates_Earn_Than_Non-College_Graduates.html7/28/2019 Rict Team Avb Qn1submission
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specifically Milton Friedmans Life-Cycle
Consumption Model, a rise in interest rate
translates to cheaper cost of consumption in the
future, making it more economically efficient to
intertemporally allocate money for future
consumption. In addition, higher interest rates
increases interest payments of fixed-deposits and
thus it will be more economically efficient to
allocate more money into saving accounts.
Mitigation:
One could work part-time while travelling in
order to reduce overheads and allow oneself to be
self-sustained throughout the entire travelling
duration. The rise in popularity of globe-trotting
and proliferation of online self-documenting
platforms such as blogs and vlogs mean that more
globe-trotters are increasingly documenting their
experiences online and often, in great detail. This
provides a channel for prospective and current
globe-trotters to gather important tips on saving
and earning money while travelling, guiding them
on globe-trotting on a low budget.
4.1.7 Instability
Globe-trotting carries the inherent risk of an
unstable life. With the constant packing andrelocating, it can be physically and mentally
exhausting. The lack of a permanent residence
overseas further exacerbates this problem. The
psychological and emotional effects are troubling
and include feelings of displacement as well as a
lack of identity. The downside of experiencing a
myriad of cultures is that one might lose direction
and be overwhelmed by the diversity,
experiencing culture fatigue 14. On an individual
level, this is undesirable and tantamount to
burning out while globe-trotting.
Mitigation:
The Internet serves as a useful tool for globe-
trotters to seek reassurance from family and
friends. With the proliferation of internet data-
based calling programmes such as Skype and
Viber, one simply requires an internet connection
and laptop to call home and find comfort. This
would, to a certain extent, help to alleviate
mental exhaustion and burning out.
4.1.8 Inability to Readapt
Globe-trotting often ends with the globe-trotter
returning to his or her home country. A risk then
surfaces whereby globe-trotters have problems re-
adjusting to life at home. Take Singapore for
example, having being used to the autonomy one
has while travelling, settling back home would
usually mean finding a stable and decent paying
job. Once again, societal expectations and
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14Retrieved from: http://books.google.com.sg/books?hl=en&lr=&id=zszx6k5Y1HMC&oi=fnd&pg=PR5&dq=top+reasons+for+travelling+the+world
+experienc+culture&ots=XL52yEMMBs&sig=W3FCEHueCoZoOn1pZMjRazdDYK8#
http://books.google.com.sg/books?hl=en&lr=&id=zszx6k5Y1HMC&oi=fnd&pg=PR5&dq=top+reasons+for+travelling+the+world+experienc+culture&ots=XL52yEMMBs&sig=W3FCEHueCoZoOn1pZMjRazdDYK8#http://books.google.com.sg/books?hl=en&lr=&id=zszx6k5Y1HMC&oi=fnd&pg=PR5&dq=top+reasons+for+travelling+the+world+experienc+culture&ots=XL52yEMMBs&sig=W3FCEHueCoZoOn1pZMjRazdDYK8#http://books.google.com.sg/books?hl=en&lr=&id=zszx6k5Y1HMC&oi=fnd&pg=PR5&dq=top+reasons+for+travelling+the+world+experienc+culture&ots=XL52yEMMBs&sig=W3FCEHueCoZoOn1pZMjRazdDYK8#http://books.google.com.sg/books?hl=en&lr=&id=zszx6k5Y1HMC&oi=fnd&pg=PR5&dq=top+reasons+for+travelling+the+world+experienc+culture&ots=XL52yEMMBs&sig=W3FCEHueCoZoOn1pZMjRazdDYK8#http://books.google.com.sg/books?hl=en&lr=&id=zszx6k5Y1HMC&oi=fnd&pg=PR5&dq=top+reasons+for+travelling+the+world+experienc+culture&ots=XL52yEMMBs&sig=W3FCEHueCoZoOn1pZMjRazdDYK8#http://books.google.com.sg/books?hl=en&lr=&id=zszx6k5Y1HMC&oi=fnd&pg=PR5&dq=top+reasons+for+travelling+the+world+experienc+culture&ots=XL52yEMMBs&sig=W3FCEHueCoZoOn1pZMjRazdDYK8#7/28/2019 Rict Team Avb Qn1submission
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pressures are at work and this will be stifling for
the just returned globe-trotter. According to Sue
Shellenbarger, a columnist at the Wall Street
Journal, some students lose direction after return
from their gap years15. While gap year is not the
same as globe-trotting, we can certainly
extrapolate the effects. Given the problems with
employment discussed earlier, it may be even
harder for globe-trotters to re-adapt to life back
home even if they wanted to find a decent job.
4.2Degree/Career
Opportunities:
4.2.1 Career Opportunities
On the other hand, benefits and costs of choosing
a degree and a career must be considered in
making a decision. Firstly, choosing the university
path expands ones career opportunities.
Employment rates for university graduates from
all 3 universities in Singapore are generally high.
This is supported by the Graduate Employment
Survey (GES) conducted in 2011, which found
that the mean full-time permanent employment16
rates of graduates across all faculties from NUS,
NTU and SMU were 90.09%, 85.60% and
92.18% respectively17. In comparison to 78.00%,
the 2011 employment rate of the resident
population aged 25 to 64 in Singapore18
, a
university degree contributes substantially to
ones employability in Singapore.
Increasing education levels of Singapore citizens
today has led to further proliferation of degree
and diploma-holders. Coupled with the transition
of Singapore into a global financial, IT and
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15Retrieved from: http://online.wsj.com/article/SB10001424052970203513204576047723922275698.html
16Refers to employment of at least 35 hours a week and where employment is not temporary. Includes contracts of one year or more.
17Retrieved from: http://moe.gov.sg/education/post-secondary/files/ges-nus.pdf
18Retrieved from: http://www.mom.gov.sg/newsroom/Pages/PressReleasesDetail.aspx?listid=398
Figure 4.1: Employment Rates of Singapore
http://www.mom.gov.sg/newsroom/Pages/PressReleasesDetail.aspx?listid=398http://moe.gov.sg/education/post-secondary/files/ges-nus.pdfhttp://online.wsj.com/article/SB10001424052970203513204576047723922275698.htmlhttp://www.mom.gov.sg/newsroom/Pages/PressReleasesDetail.aspx?listid=398http://www.mom.gov.sg/newsroom/Pages/PressReleasesDetail.aspx?listid=398http://www.mom.gov.sg/newsroom/Pages/PressReleasesDetail.aspx?listid=398http://moe.gov.sg/education/post-secondary/files/ges-nus.pdfhttp://moe.gov.sg/education/post-secondary/files/ges-nus.pdfhttp://online.wsj.com/article/SB10001424052970203513204576047723922275698.htmlhttp://online.wsj.com/article/SB10001424052970203513204576047723922275698.html7/28/2019 Rict Team Avb Qn1submission
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commodities trading hub, employers now view
tertiary education as a pre-requisite when
entertaining applications for professional jobs.
This justifies the need and value of a university
degree in Singapore today.
4.2.2 Money
On a similar note, mean salaries of fresh
graduates has been increasing steadily for the past
3 years. A survey has shown that average entry-
level monthly salaries for fresh graduates with a
degree have increased from S$254019 in 2010 toS$2678 in 2012. Likewise, starting salaries for
diploma holders have increased from S$1763 to S
$186620 in the past 3 years. As this trend
continues, it is foreseeable that there would be a
large disparity between graduates and globe-
trotters in salaries earned, given that globe-trotters
are unlikely to hold down a permanent job
overseas. Chances of promotion in foreign jobs
held by globe-trotters are significantly reduced as
well, since it is unlikely that they will hold down
the same job for long enough periods of time.
It can be argued that globe-trotters may settle
down, either in another country or Singapore, and
eventually reach this same earning power, albeit
slower than graduates who started working earlier.
However, taking into account the time value of
money, graduates will still earn an overall larger
amount of money in the same time frame, given
that the present value of salaries of graduates
exceeds that of globe-trotters. Hence, from a
financial point of view, graduates can be expected
to benefit more than globe-trotters.
4.2.3 Critical Thinking & Analytical Skills
Besides monetary gains, graduates who embark
on their careers will acquire critical professional
skills from the workplace. One such example
would be business communication skills, both
verbal and written. Through exposure to the
corporate climate and interaction with colleagues
or clients, a graduates ability to write and speak
effectively will improve immensely over time.
Furthermore, analytical and research skills will
result from work. This includes the ability to
assess situations, seek multiple perspectives and
formulate a plan of action to resolve issues. This
in turn confers upon problem-solving skills
applicable to multiple facets of life.
Upon recognition from superiors and resulting
promotions, individuals will be tasked toundertake more duties, such as managing larger-
scale projects and teams. In effective delegation
and overseeing of duties, leadership and
management skills will be called into play, thus
presenting opportunities to hone such skills. At
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19Retrieved from: http://tum-asia.edu.sg/wp-content/uploads/2012/05/Singapore_Fresh_graduate_survey_press_release_2011.pdf
20Retrieved from: http://sbr.com.sg/hr-education/news/higher-starting-monthly-pay-shocks-fresh-grads
http://tum-asia.edu.sg/wp-content/uploads/2012/05/Singapore_Fresh_graduate_survey_press_release_2011.pdfhttp://tum-asia.edu.sg/wp-content/uploads/2012/05/Singapore_Fresh_graduate_survey_press_release_2011.pdfhttp://tum-asia.edu.sg/wp-content/uploads/2012/05/Singapore_Fresh_graduate_survey_press_release_2011.pdfhttp://tum-asia.edu.sg/wp-content/uploads/2012/05/Singapore_Fresh_graduate_survey_press_release_2011.pdf7/28/2019 Rict Team Avb Qn1submission
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the same time, this inculcates a sense of
responsibility in individuals.
Ultimately, these skills contribute to the
overarching notions of self-efficacy, self-esteem
and internal locus of control. The workplace
provides a conducive environment for graduates
to build confidence in his or her ability to achieve
goals, leading to the belief that they, not external
factors, are in control of their lives and fates. In
turn, these individuals can be expected to achieve
more confidence, capabilities and job satisfaction
than globe-trotters.
Risks & Mitigation:
4.2.4 Suppression of Individuality
In most professional jobs today, mastery of a skill
is required of applicants. Specialized degrees in
fields such as medicine, law and architecture
serve to develop students extensively in an
expertise. The specific focus of a degree or job
may thus limit avenues of self-expression of an
individual.
Furthermore, companies promoting organizational
commitment, employee engagement and job
satisfaction will be likely to possess a strong
organizational culture. It is highly likely that
given the amount of time spent in a workplace,
organizational culture may suppress individuality
of employees. For instance,Enron had a corporate
culture that promoted values of risk taking,
aggressive growth and entrepreneurial creativity.
These positive values were however not
supported by corporate integrity and led to
unethical conduct. Employees who felt that it was
necessary to conform to the existing corporate
culture further exacerbated the situation when
choosing not to whistle-blow.
Therefore, cognitive dissonance between ones
personal values and a corporations culture may
arise, leading to a state of dilemma and tension
for individuals.
4.2.5 Work Stress
Modern life, particularly that of working adults,
can be said to encompass significant levels of
stress. In a local context, the workplace
environment is demanding, in which professionals
often make personal sacrifices for job
advancements.
Furthermore, the proliferation of 3G and LTE
handheld devices and tablets has increased
connectivity on-the-go, allowing employees to
take work wherever they go and indirectly
increasing working hours. In a survey conducted
by JobsCentral in 2012, 66% of respondents
stated that their workload has increased in the last
6 months. Of them, 83.3% said that as a result,
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work stress has also increased in this same time
frame.
Stress overload directly leads to detrimental
cognitive, emotional and physical symptoms.
Cognitive symptoms include memory problems
and inability to concentrate while emotional
symptoms consist of irritability and depression.
More visibly and worrying, physical symptoms
may include aches, dizziness and nausea. These
negative effects associated with stress hence
highlight a considerable con of choosing a career
over globe-trotting.
Mitigation:
Acknowledging the potentially stressful situations
that employees may face, corporations have
begun to introduce stress-reduction programmes
and support channels for employees to feedback.
For example,Aetna, a leading insurance company
has recently introduced two new mind-body stress
reduction workplace programs known as
Mindfulness at Work and Viniyoga Stress
Reduction in 2012. Aetna CEO Mark Bertolini
recognizes the problems associated with work
stress and was quoted as saying, Stress can havea significant impact on physical and mental
health, so there is a strong need for programs that
help people reduce stress as part of achieving
their best health21.
The noticeable trend is that corporations are
increasingly taking into account work stress and
are starting to take active steps towards managing
and reducing stress of employees before it
becomes damaging. The increased awareness of
workplace stress and proactivity of corporation in
addressing them removes much of the social
stigma associated with workplace stress and its
sufferers. Therefore, it becomes easier for
individuals suffering from work stress to come
forward and seek help from their employers and
expect their employers to be understanding.
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21Retrieved from: http://www.businesswire.com/news/home/20120223005984/en/Aetna-Delivers-Evidence-based-Mind-Body-Stress-Management-Programs
http://www.businesswire.com/news/home/20120223005984/en/Aetna-Delivers-Evidence-based-Mind-Body-Stress-Management-Programshttp://www.businesswire.com/news/home/20120223005984/en/Aetna-Delivers-Evidence-based-Mind-Body-Stress-Management-Programshttp://www.businesswire.com/news/home/20120223005984/en/Aetna-Delivers-Evidence-based-Mind-Body-Stress-Management-Programshttp://www.businesswire.com/news/home/20120223005984/en/Aetna-Delivers-Evidence-based-Mind-Body-Stress-Management-Programs7/28/2019 Rict Team Avb Qn1submission
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5. OPPORTUNITYANDRISKASSESSMENT
5.1EvaluationTables
Referring back to the Probability-Impact Matrix (Figure 3.1), the probability and impact associated withpotential events are evaluated and assigned. Through this, the opportunity or risk levels of each event are
determined, falling under levels of Low, Medium and High. For instance, achieving self-
actualization as a result of globe-trotting is deemed moderate in likelihood of occurrence and constitutes a
major impact. Thus, in this case, the resultant level of opportunity would be High and opportunity score
would be 6.
PROBABILITY IMPACTOPPORTUNITY/RISK LEVEL
SCORE
Benefits
Gaining a GlobalPerspective:
Likely Major High 9
Self-Actualization:
Moderate Major High 6
FinancialManagement:
Likely Moderate High 6
DiscoveringPassion:
Unlikely Moderate Low 2
Total: 23
Costs
Financial
Burden:
Likely Major High 9
OpportunityCosts:
Likely Major High 9
Instability: Moderate Moderate Medium 4
Inability toReadapt:
Moderate Moderate Medium 4
Total: 26
17
Evaluation Table: Globe-Trotting
Figure 5.1: Evaluation Table for Globe-Trotting
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PROBABILITY IMPACTOPPORTUNITY/RISK LEVEL
SCORE
Benefits
Career Opportunities: Likely Major High 9
Money: Moderate Major High 6
Critical Thinking &Analytical Skills:
Moderate Moderate Medium 4
Total: 19
CostsSuppression ofIndividuality:
Moderate Moderate Medium 4
Work Stress: Likely Major High 9
Total: 13
As seen above, evaluation tables for both globe-trotting and choosing a degree allow the tabulation of
quantitative scores of benefits and costs under the 2 routes. With respective to globe-trotting, benefits
identified garnered a total opportunity score of 23 with 3 High and 1 Low opportunities. On the other
hand, total risk score was 26 for globe-trotting, largely pertaining to the High risks of a financial burden
and opportunity costs.
As for the path of choosing a degree and career, total opportunity score of benefits was 19, substantially
lower than the opportunity score of globe-trotting. However, total risk score was noticeably lower thanthat of globe-trotting, where a score of 13 reflected the low-risk nature of this traditional route.
These results are consistent with the risk-return tradeoff principle, where low-risk and high-risk
investments are associated with low and high potential returns respectively. The globe-trotting route can
thus be classified as a high-risk option for Gen Ys in contrast to the low-risk option of pursuing a degree
and career.
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Evaluation Table: Degree/Career
Figure 5.2: Evaluation Table for Degree/Career
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INHERENT RISK
RESIDU L RISK RISK
Probability Impact
Probability Impact
SCORE
FinancialBurden
3 3
REDUCE Finding part-time work
overseas alleviatesfinancial costs
Seek out cost-savingtips via online
platforms (blogs, vlogs)
3 2 6
OpportunityCosts
3 3
REDUCE
Developing valuablelife lessons and otherskills during globe-trotting reducesopportunity costs
Globe-trotters maypursue online courses todevelop subject-matterknowledge
3 2 6
Instability 2 2
REDUCE
Able to reconnect withfamily and friends inSingapore throughInternet data-basedmeans of
communication(Skype, Viber)
1 2 2
Inability toReadapt
2 2 ACCEPT 2 2 4
Suppression ofIndividuality
2 2 ACCEPT 2 2 4
Work Stress 3 3
REDUCE
Better manage stressthrough stress-reduction
programmes andsupport channelsavailable in companies
3 2 6
However, after considering mitigation of the identified risks, residual risk scores are substantially lower.
As seen in the Risk Assessment Table above, the globe-trotting route now encompasses a total risk score
of 18, resulting from the mitigation of financial burden, opportunity costs and instability. As for the
degree and career option, risk score is now 10 instead of 13 given that potential impact of work stress has
decreased.
19
Figure 5.3: Overall Risk Assessment of Globe-Trotting & Degree/Career
Risk Assessment Table
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6. FINALRECOMMENDATION
After an extensive analysis of the various factors mentioned above, we propose 2 different
recommendations for the 3 identified segments of Generation Ys.
6.1SmallRiskAppetite:Degree/Career
The first segment of Generation Ys has a small risk appetite range of 1 to 12. Residual risk score of 10 for
the degree/career route thus falls within the acceptable risk range. On the other hand, the high risk score
of globe-trotting of 18 deters them from undertaking this route. Consequently, they should pursue a
degree and start their career immediately to achieve their current objectives. They would be more
comfortable with this arrangement as they are usually more concerned with financial independence rather
than exploring the world and attaining self-actualization.
6.2Moderate&LargeRiskAppetite:Globe-Trotting
On the contrary, Generation Ys with moderate risk appetite are caught in between choosing globe-trotting
and getting a university degree. Based on the inherent risk values of globe-trotting, it would seem to be
beyond the risk appetite tolerated by this segment. However, adopting the risk responses suggested above
mitigates these risks. Resultant residual risk score of globe-trotting is 18, hence falling within the risk
appetite range of 1 to 24. As mentioned in Section 2, a Generation Y individual should opt for globe-trotting since the option is more aligned with the need for self-actualization. Facing the choice of both
options, individuals with moderate risk appetite would thus be better served with globe-trotting given that
self-actualization is of higher importance than needs of esteem.
The last group with the highest risk appetite range of 1 to 36 is able to tolerate a higher risk. Total residual
risk score of 18 for globe-trotting is well below their risk appetite limit. Consistent with the risk-return
trade-off principle, they should also seek to maximize their returns for their target risk appetite. They
should thus choose the option of globe-trotting which provides an opportunity score of 23 as compared to
the score of 19, that of obtaining a degree and pursuing a career.
6.3GoodorBadMove?
In conclusion, whether globe-trotting is a good or bad move will depend on the objectives of the
individual as well as his or her risk appetite. If the option of globe-trotting is aligned with his or her
objective and falls within the risk appetite, it will be the optimal decision for the individual. Through risk
management, we can thus arrive at a sensible decision with regards to the issue.
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