Riskonet warns organisations to be prepared as South African Reserve Bank predicts a perfect storm of risk factors
Risk management consultancy Riskonet has expressed concern over the country’s macro-risk status following the South African Reserve Bank’s latest financial stability review. The report, which outlines the top risks to South Africa, supports predictions of a worsening environment.
The report detailed a particularly worrying outcome for South Africa’s economy if global trends towards stagflation – the damaging combination of increased inflation, high unemployment, and decreased economic demand – continue. The rising cost of food and gas are also highlighted as causes for further social unrest and instability. Another concern was the “unprecedentedly low levels of liquidity in the South African government bond (SAGB) market since the start of the Covid-19 pandemic” which could result in further market volatility. Scenario tests for the impact of volatile interest and currency rates are essential.
South Africa’s economy is already in a dire state due to the knock-on effects of events like last year’s riots and this year’s extreme weather events which have wreaked havoc on key infrastructure and damaged supply chains – events which the report listed in its analysis.
“Reports like these are constant reminders of the serious challenges faced by many organisations. Risk professionals should collaborate to mitigate industry wide risks,” says Volker von Widdern the South African head of Strategic Risk at Riskonet. Von Widdern calls on organisations to urgently reassess their risk strategies as enterprise level risks can manifest very quickly. “If you have a solid strategy and some experienced advisors on your team, that’s a good start,” says Von Widdern. “But you need to be constantly reassessing and updating your strategies for future events because historical exposure forecasts are no longer relevant in the current volatile climate. “When it comes to risk there’s no such thing as being over-prepared,” he adds.
