How Prepared Is Your Business?

Big corporates have teams of people dedicated to risk management, but for smaller businesses, the concept can be a lot more abstract – it’s something done through instinct or on an ad hoc basis. However, no business is too small to plan.

At its simplest, the act of managing risk involves mapping out the processes within an organisation and identifying critical business risks. From there a business should document these risks and source viable solutions in the event that these risks come to pass.

One way of doing this, according to David Pretorius, a risk solutions specialist at Thomson Reuters, is to access what standard risks a business might face.

“Each industry and organisation has certain standard risks it will be prone to, and these should be easy to source,” Pretorius explains. “However, this should be seen only as the starting point and not the end result. They should ultimately embark on internal information gathering, especially using questionnaires focused at the coalface rather than board level.”

Any business that wants to flourish should implement strong risk-management principles as soon as possible.

“Businesses ultimately fail due to improper risk-management principles,” Pretorius says.

Local issues

South Africa is going through a turbulent time with political and economic instability. Despite dramatic headlines, though, the impact on businesses tends to be subtler, and slower to become clear.

“Most predictions for 2017 were less than optimistic at the start of the year, and one could argue that things have become progressively worse over the last six months, with little sign of improving any time soon,” says Justin Keevy, divisional director at Camargue Commercial Crime and Cyber Risks. “SMEs and big business will have many challenges to navigate over  the next 12 to 18 months as they continue to operate in an ‘interesting’ regulatory, political and economic climate.”

Keevy says that while the shuffling of Finance Ministers in 2015, and most recently the firing of Pravin Gordhan, may have left the headlines, the impact of these events is still being felt today, particularly as they relate to investment.

“Political instability, the burning of educational institutions and buses are examples of other factors influencing investor confidence,” Keevy adds.

One of the biggest challenges for businesses is to keep track of multiple major pieces of legislation which are taking an uncertain path through parliament. These range from POPI  and the Cybercrimes and Cybersecurity Bill to new IT industry regulations and land reform. Planning ahead for their impact is tough,  since the implications or effective date of introduction are unclear.

The rise of new technologies

One threat that many companies may not be properly aware of is the potential for technological disruption in their industry, Keevy says.

Emerging technologies such as drones and driverless cars pose a risk to business, because they increase efficiency or can render traditional methods obsolete. Business owners who don’t take account of the threat of disruption posed by tech innovation risk losing a competitive advantage.

Which leaves just one question: is your business fully prepared?

For its 2017 Risk Report, the Institute of Risk Management South Africa surveyed more than 1 500 individuals and organisations. It found that top concerns at national level are corruption and water shortages, while operationally businesses are most worried about increased strike actions and currency fluctuatiols

Top 10 south african country level risks

Increasing corruption

Water crises

Unemployment or underemployment

Droughts in sub-Saharan Africa

Lack of leadership

Fiscal crisis/credit rating downgrades

Economic slowdown or recession

Increasing strike action

Profound political and social Instability

Governance failure

Top 10 south african  industry level risks

Increasing strike action

Exchange rate fluctuations

Lack of innovation

Regulatory/legislative changes

Increasing corruption

Profound political and  social instability

Fiscal crisis/credit rating downgrades

Escalation in large-scale cyber attacks

Governance failure

Education and skills development