After a decade of monitoring and reporting on South Africa’s risk landscape, and encouraging best practice risk management in both the private and public sectors, the Institute of Risk Management South Africa (IRMSA) has declared it time for a rethink.
At the launch of its 10th annual report, Risk Report 2024-25, the institute warned that South Africa’s national resilience was nearing a catastrophic tipping point, and that the single highest risk facing the country was a disengaged populace. They singled out action, culture, collaboration and resilience as key elements to move the country from complacency to action.
Back into the pot, froggies…
The report landed just moments after the conclusion of a somewhat positive government of national unity (GNU) arrangement at the national level; but moments before the collapse of similar discussions in Gauteng. In this humble writer’s opinion, the ruling African National Congress (ANC) was not as comfortable relinquishing power as previously thought. They caught the opposition with a trick at national level, honouring the GNU agreement on executive placements but then clawing back influence and power by expanding the Cabinet. And in Gauteng they stuck to their guns for an eight-to-three executive split despite only having 34% of the vote.
There are some big changes at play in the 2024-25 Risk Report methodology, as explained by Christopher Palm, Chief Risk Advisor at IRMSA during the report launch in Johannesburg recently. First, the report has a broader application than previously. “We have moved from an individual member or value proposition … to something that can be use at country level, at an industry level and at an organisation level,” Palm said. Second, the report boasts an expanded scope to include insights from the country’s universities (academia and the youth) and other SADC countries in addition to those from South Africa-based risk professionals. According to Palm, the youth view forced a rethink on integrating strategy, risk and resilience.
IRMSA took a long hard look at the current risk landscape, concluding that the risks identified a decade ago remain virtually unchanged today. Risks were being identified and managed; but the country was making no progress towards evolving its risk landscape. The latest report thus refocuses on building resilience through action and singles out collaboration and culture as elements that will drive change. Per the report’s executive summary: “The emerging balancing act between vulnerability and resilience prompted a reconsideration of the future scenarios for South Africa … we cannot wait for a few leaders to come to our rescue … ordinary South Africans and organisations will have to lead from where they stand”.
A dozen risks that affect us all
The 172-page report offers an industry-specific view of the 12 identified country risks allowing each of 16 sectors to start rethinking their approaches to risk and resilience. The 12 risks were summarised as functional state; politics; economy; social security; rule of law; water; energy; logistics; food security; climate change; technology; and skills. IRMSA noted that South Africa would have to urgently address water, energy and logistics in the coming year before singling out a functional state and skills as non-negotiable starting points. The institute kicked off the discussion on future risk management approaches by reflecting on risk causes and effects.
Palm commented that each risk had to be thought about differently, dividing them into four quadrants. Risks that can be addressed by influencing national strategy appeared in a ‘strategy’ box containing skills, economy and politics. He placed functional state and rule of law in a ‘transformation’ box and explained that if these risks were approached correctly, they would unlock capabilities in other areas. Water, energy and logistics were placed in an optimisation box for their potential to strengthen and leverage other risk approaches. And three risks appeared in a sustainability box with the understanding that social security, climate and food security needed deliberate, long-term views. Finally, technology had influence over all the boxes.
The roadmap to risk management success crystallised in a thought-provoking systems diagram. Skills, economy and politics were identified as pivots, or risks that have to be thought about differently. “These pivots (in triangles) are really critical because they become catalysts,” Palm said. Functional state, rule of law, logistics, water and energy were represented in the systems diagram as drivers, in circles. “A driver is a risk that impacts another risk or becomes a cause to other risks,” he said, adding that addressing such risks in a creative, innovative way often had synergistic outcomes. Social security, food security and climate were represented in the diagram as outcomes from the planning and actions taken in other risk areas.
The first pivot: skills and education
Skills is the first pivot in the diagram. “We need to think differently about how we educate, how we position and what those skills are … we need to get the right skills in the right place, and do it now,” Palm said. He argued that the right skills were critical in mitigating the functional state and rule of law risks. The skills pivot acts on these risk drivers, which effect cascades on to three other drivers being logistics, water and energy. “It is our view if we get [the latter three] drivers right, we will enable the economy,” he said. The argument continued that a growing economy would enable another pivot, namely policy, and finally deliver the aforementioned outcomes.
Some additional comment on pivots is indicated. In the above discussion, a risk is defined as a pivot because it is something that individuals, firms and government need to think differently about. “If we get skills right, we put in place a functional state … if the state works, we have logistics, water and energy that works,” Palm explained. “If we have rule of law, we have an enabler to protect infrastructure and to address issues such as corruption, fraud and theft”. Harness these, and you will see the economy starting to grow. “And If you have money, you have choices [which can reflect] in policy that addresses risks like social security, food security and climate,” he said. Technology was described as a pivot for the entire risk landscape.
A Dickensian risk framework?
The report presentation played out under a Dickensian ‘Tale of Two Cities’ theme, with IRMSA warning of the risk of the so-called first city, represented by the current middle class, gradually being drawn into a second city scenario. Christelle Marais, CRM Prof and Risk Report Project Lead said the 2024-25 Risk Report had been themed around ‘two cities’ in acknowledgement of the continued, multi-year decline in earnings across the country’s middle class. At the foundational level, the solution requires active engagement from all citizens with a focus on skills and education.
Again, turning to the report’s executive summary: “The single highest risk in South Africa is a disengaged people; considering the future from social, policy and economic perspectives reveals a key [the critical need for] skilled resources to drive the economy, and servant leadership to focus those skills”.
Writer’s Thoughts:
I was so taken by the 2024-25 Risk Report launch that I described it to my LinkedIn audience as ‘next-level, innovative thought leadership in risk management’. Do you agree? Or do you think it remains too theoretical, missing the action catalyst. Please comment below, interact with us on X at @fanews_online or email us your thoughts editor@fanews.co.za.
Comments
Added by Risk Culture Builder, 15 Jul 2024https://riskculturebuilders.com/articles/why-risk-culture-building-should-be-the-most-important-item-on-the-board-agenda/ Report Abuse
This ties in with the broken window theory. If we maintain things properly they will not go to pot the way they are. Training and education needs a strong focus in this area.
All in all, I think this is a laudable, much appreciated report that needs to be acted on with urgency. Report Abuse
1. the type of education acquired and its relevance to the post and their willingness to learn with speed so as the organisation achieves its objectives.
2. preservation of skilled workers and retainment of workers especially in government. Most are hoping from one institute to the other.
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