How do risk managers lead change

The Institute of Risk Management South Africa (IRMSA) released the fifth edition of its Risk Report: South Africa Risks 2019, and FAnews attended the IRMSA Risk Report Breakfast Presentation where the role of risk managers in a changing world was discussed. Attendees were treated to a number of insightful talks and practical case studies on how a future approach to risk management can be successful.

The catalyst for change

Gillian le Cordeur, Chief Executive Officer at IRMSA, opened the breakfast with similar sentiments to those she shared in the report. 

“As we find ourselves entering 2019, it is important to reflect on the past and prepare for the future and the opportunities that lie ahead. The playing field has changed, and the profession of risk management is even more elevated and prominent, showing the impact of the management of risk within all areas of business. This has allowed our profession to tackle the opportunity that has arisen and have the hard conversations which are required by leading risk professionals and business leaders,” she said. 

“I believe that the IRMSA Risk Reports for South Africa and for our South African industries are the catalyst for change and for measuring our real contribution in changing our country and our organisations,” she continued. 

The top risks

According to the IRMSA Risk Report, the top risks the country faces are:

1. Structurally high unemployment
2. Growing income disparity and inequality
3. Failure of governance in the public sector
4. Unmanageable fraud and corruption
5. Inadequate and/or substandard education and skills development
6. Energy price shock
7. Labour unrest and strike action
8. National policy uncertainty/instability
9. Cyberattacks (ransomware, algorithm shutdown of the internet of things)
10. Macroeconomic developments

And the industry’s top ten risks are:

1. Failure of public governance
2. Inadequate and/or substandard education and skills development
3. Cyberattacks (ransom, algorithm shutdown of the internet of things)
4. Information security (data fraud and data theft)
5. Microeconomic developments
6. Macroeconomic developments
7. National policy uncertainty/instability
8. Disruptive technologies (AI, internet of things, robotisation)
9. Government policy, legislative and regulatory changes and uncertainty
10. Labour unrest and strike action

Trends in the report

Subject Matter Experts (SMEs) also provide a prediction of how they see the risk profile for South Africa unfold over the next three to five years.

“SMEs predicted fraud and corruption, electricity supply, income disparity and inequality, energy prices, lack of leadership, economic developments, credit risk, reputation and brand damage risk could improve over the next 18 months to five-year window. They predicted political uncertainty, infrastructure and networks, technologies, unemployment, lack of innovation, cyber attacks and inadequate succession planning as risk which could deteriorate over the next 18 months to five-year window,” said Christopher Palm, Chief Risk Advisor at IRMSA.

“The SMEs also predicted education and skills shortage, business interruptions, information security, failure of governance in the public/private sector, labour unrest, economic developments, government policy, legislative and regulatory changes, global political uncertainty and disruption, risk which could remain unchanged over the next 18 months to five-year window,” continued Palm.

Risk development focus areas for 2019

“Analysing the five editions of the IRMSA Risk Reports shows that nine out of the 14 common risks (Top 10s of both country and industry) have been repeated for at least the past three, and in some cases four years,” said Graeme Codrington, CEO of TomorrowToday.

Palm said, “If we compare this year’s risk report to those of previous years, there is an interesting and hopeful shift. The impact of fraud and corruption and the failure of the State has shifted down the list. One of the biggest unseen risks in the country is the divide between business, government and civil society. This must change, and it must change quickly. During the course of 2018, South Africans’ perception of their own country, and the way they spoke about it to others, slipped dramatically.”

“There are three risk development focus areas to focus on; The future: Risk practitioners should be “the ultimate integrators” of strategic and business risk information and adding to that, the value of predictive capabilities, facilitating discussions about alternative futures and opportunities. Understanding disruption: Risk practitioners must be able to take the lead and guide their leadership in making sense of disruption, both the risks and opportunities. To know the level of risk maturity as an indicator of, amongst other things, leadership views on the importance of driving risk response/action plans, how comfortable they are with potentially controversial risk issues being highlighted within the organisation as well as their level of innovation and resistance to change,” continued Codrington.

“Risk modelling and thinking about the future should not merely be done at annual strategic planning events by senior leaders but should be part of every team’s regular meetings throughout the year. Don’t leave the Risk Report on the shelf after a cursory flick through its pages. Instead, use it as a catalyst for conversations and insights as your organisation prepares itself for the 2020s,” concluded Codrington.

The 2020 challenge

A thread prevalent throughout the report is its call to risk professionals to be more than analysts and presenters of its results, starting with the Minister of Public Enterprises, Pravin Gordhan’s assertion that, “The risk management profession plays a key role in leadership. Our members should lead the way by not just reading the document but taking into the leadership discussions, influencing their organisations and communities to do something concrete with the suggested risk responses,” said Palm.

“Inherent in the role of risk management is the capability to imagine future scenarios - what could happen, what might be and what it means for us today. Risk managers must therefore learn to think like futurists if they are to guide their organisations through the next decade. This includes integrating risk management into the culture of the organisation, especially in an environment where change is disruptive and exponential and aligns nicely with the IRMSA 2019 Theme “#impact: A Year of Risk Activism”. This is what the 2020s are going to be about – much more so than we’ve experienced thus far,” concluded Palm.

Editor’s Thoughts:
As stated above, the playing field has changed, and the profession of risk management is even more elevated and prominent, showing the impact of the management of risk within all areas of business. Don’t leave the Risk Report on the shelf. Instead, use it as a catalyst for conversations and insights as your organisation prepares itself for the 2020s. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts myra@fanews.co.za.