Taking risks and working past them

Sir Winston Churchill, arguably one of the most influential political leaders of our time, once said that one should never let a good crisis go to waste. While there is a bit of a debate as to when a crisis is ever good, it is clear that politically – and economically – South Africa is facing a crisis. The country finally saw its worst fears realised when it was downgraded to sub investment grade, and there are concerns about how the country will ever get out of the mire it finds itself in.

Nation building

While South Africa has faced its fair share of political crises, we have always worked together as a nation to get past these crises and show our resolve.

This is what faces us now. In order to get out of sub investment grade, we have to find a way to fast track economic growth and gain some form of political stability. While the latter is up to politicians, we all have a role to play in contributing towards the former. This was the focus of discussions at the recently held Inaugural South African Insurance Association (SAIA) Indaba.

Develop a leadership narrative

The document designed to drive growth in the country is the National Development Plan (NDP). It is a document formed by the country’s top political minds, but is much debated among the populace. Some have even referred to it as a wish list rather than a plan.

“Even if the NDP is a wish list, it points us in a direction that we need to go towards in order to re-establish ourselves as an African economic powerhouse,” said Angela Mhlanga, Head of Insurance South Africa at Standard Bank Wealth. “Leadership in South Africa is where the country has always thrived on the African continent. We have a very young, yet well respected democracy and we have the opposition parties to ensure that this will always be the case. Yet, we need to develop a leadership narrative that is vastly different to the current one,” she said.

Structural flaws

Mhlanga added that when one looks at the South African economy, it is structurally flawed and doesn’t encourage employment. This leads to poverty and in some cases political narratives that are centred around far right nationalism.

“Do we want this for South Africa? If we don’t, we need to move away from our tick box approach that we currently have and encourage a proactive approach to changing the economy. We need to shift gear and say that even with the best attempts at developing the NDP and achieving its outcomes, we need to seriously ask why growth is still a problem in this country,” said Mhlanga.

A member of nobility

Nobody is denying that any of the information above is untrue. We are fully aware of the challenges and obstacles we face. We also need to appreciate the risks that we are facing and realise our importance in the makeup of South Africa. As Junior Ngulube – CEO of Sanlam Emerging Markets – puts it, “as participants in the financial services industry, we belong to a noble profession.”

He added that throughout history, human progression has been defined by taking risks and working past them. “Behind this risk is the insurance industry which has allowed human progression with the management of certain risks,” said Ngulube.

Part of the problem in South Africa, which contributed to the downgrade to sub investment status, has been the management of the country’s State Owned Enterprises (SOEs). A particular problem in these organisations has been risk management.

“We have a lot of risk management skills sitting in retirement. Let’s bring these skills back into the fold so that a new generation of risk managers can learn from the past. This can benefit not only SOEs, but also companies that play a critical role in the country’s economic development,” said Ngulube.

A major employer

Besides being a part of a noble profession, we need to also point out facts and figures that the financial services sector plays a crucial role in society. Herman Schoeman, CEO of Guardrisk, points out that the financial services industry settled R61billion worth of claims in 2015.

“While a lot has been done to develop the industry, the road towards perfection is still long. We need to encourage the development of this industry and to grow young leaders. As an industry, we are a major contributor to the country’s gross domestic product and we are a major employer. This has only been realised because our stakeholders apply one simple rule: we don’t pay for efforts, we pay for results,” said Schoeman.

Editor’s Thoughts:
It’s not that the insurance industry is devoid of good leadership, the challenge presented to the industry is how this leadership responds to working towards the objective set out by the NDP while keeping shareholders happy. This double bottom line has become a major modern struggle for even the biggest organisations. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts jonathan@fanews.co.za.