The Institute of Risk Management South Africa (IRMSA) says that South Africa’s risks have increased markedly over the past few years, with several more on the way.
Christopher Palm, chief risk advisor at the IRMSA, said that while these risks to the country are well known, and widely documented, responses overall, have been ineffective.
The risks, which include unemployment, fraud and corruption, income disparity and failure of governance, have actually worsened, it said, pointing to unemployment as an example, which climbed in the third quarter of 2019, to 29.1% – its highest rate in over 16 years.
Looking ahead, IRMSA said that new risks include climate change, which has sporadically been included on South Africa’s risk profile, social disobedience, and pressure on the country’s Chapter 9 institutions, which include the Public Protector and the South Africa Human Rights Commission.
“South Africa needs effective Chapter 9 institutions who uphold and enhance democracy on our behalf. IRMSA believes that a strong, ethical and independent leadership that visibly holds key role players accountable within the roles they have been voted into, is needed,” said Palm.
IRMSA said that board members, executive committees and chief executives of South African organisations should expect more from their risk managers.
“Internationally, a risk manager will not be appointed if they cannot add value to the organisation’s performance. Risk managers are expected to confidently comment on the strategy and performance of an organisation and contribute to the company’s agility by delivering quality, timeous and relevant information. Local companies should demand more from risk managers, and we should deliver,” said Palm.
“For example, a risk manager with quantitative analytics skills who takes this approach can be more predictive and support the business’ strategy with alternative futures, which will lead to better decision-making. If businesses know what their options are and these options have been quantified, it gets easier to make the right decisions.”
IRMSA is set to publish its South Africa Risk Report 2020 in February, the sixth such addition of the report.
Reflecting on the risks that have materialised over the past five years, many things have to be done differently, said Palm.
“The first is ethical leadership, accompanied by pervasive and persistent accountability and consequence management. A very critical paradigm shift required by leadership is that risk responses that were effective in the past are not guaranteed to address the risks and opportunities of the future.”
Palm called on companies to do more of the good, less of the bad, and grow resilience to thrive in an ever-changing landscape.
“Firstly, everyone needs to start talking about strategy, risk and resilience. Secondly, we need to clearly understand who our stakeholders are, the rules they play by, and the context in which this will happen. Lastly, organisations will need more agility and robustness in their governance processes,” he said.