Rict Team Avb Qn1submission

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

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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.

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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.html


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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-2012


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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.

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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.

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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

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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_statistics


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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-IdhpoiK5HjrZXVH8rtilZo


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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/


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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.php


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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.html


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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

12

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#


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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

13

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.html


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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

14

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.pdf


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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,

15


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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.

16

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-Programs


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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:


Total: 19

CostsSuppression ofIndividuality:


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.

18

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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