Written by Dr Arthur Linke, Member of the IRMSA Risk Intelligence Committee 

The renowned World Economic Forum’s (WEF) 2020 Risk Report featured all of the Top-5 global risks as being climate-related risks.  These included: Extreme Weather, Climate Action Failure, Natural Disasters, Biodiversity Loss and Human-Made Environmental Disasters. 

In this time of a pandemic crisis, we must reiterate the significance of climate risk, and that we need not look far to remember many acute examples of climate risks materialising. 

The wildfire disaster devastation on all continents except Antartica in the past several years comes to mind, with the Knysna Fires, South Africa’s single largest ever environmental disaster economically being a particular local case in point. 

Should an acute climate disaster strike in these pandemic times, the pressure on our human and economic resources would be compounded, and even more incomprehensible. 

That is another lesson of the WEF Risk Report – the interconnected nature of risks, as well as the fact that “big loss events” or “long tail events” as they are called are becoming more frequent, and more devastating.

As an aside, the risk of pandemics also featured in the Top-10 high-impact risks in the WEF 2020 Risk Report. 

It has been in the report for years, highlighted in special focus sections, and in 2015 it was the second highest impact risk, based on the events of the time. 

Many may consider Covid-19 to be a Black Swan, but the WEF reports and other sources clearly indicate to us that the risk of pandemics has certainly been on the radar for a long time. 

We have had a number of “preview” experiences in the past years with SARS, MERS, Ebola etc. and thus this is a “known unknown”, sometimes referred to as a grey elephant or even a grey rhino, utilising an African wildlife motif. 

For those interested in déjà vu moments, the 1918 Spanish Flu pandemic is a precursor. John Barry’s classic book on this catastrophic scourge comes highly recommended, whereby 2020 is a 100-year pandemic flashback all over again, with one of the few differences this time around being the Internet. 

We would do well to remember that when rating, assessing or evaluating risks and planning scenarios, we should always consider the worst-case possible scenario of raw or untreated risk (imaginable or even unimaginable) as a starting point.

The main lesson, however, to draw everyone’s attention back to, is that climate risk is a slow (but accelerating) creep, like the analogy of the frog in hot water that doesn’t notice the temperature headed to boiling point. 

Similar to Covid-19, many seem to have so divergent and fervent opinions of climate risks.  While we may not be headed to immediate boiling, we are certainly raising the temperature of our planet and our carbon emissions in an unprecedented way. 

Just like we weren’t prepared enough for Covid-19 despite all the warning signs (some being more prepared than others), we are not sensing the gravity, not preparing enough as a collective for climate risk, and not increasing our resilience.

The insurance sector is one of the first sectors that has had to react directly to climate risk – fight or flight.  Another IRMSA Risk Chat featured Environmental Social and Governance (ESG) reporting and what it means, but basically there are three factors impacting the insurance sector with regards to climate risk, and two of them have to do with ESG. 

The more apparent risk is that insuring assets threatened by climate risks e.g. properties by fire, flooding etc. is becoming less predictable and not financially viable as “big loss events” or “long tail events” become more frequent and more severe. 

There is something called the Risk Protection Gap (RPG) which represents those assets that are not protected (primarily not insured) against risks which is growing, also in part as a result of assets becoming non-insurable due to climate risks, all this to the detriment of global society and often the most vulnerable (another catastrophic slow boil).
 
Drawing attention back to the Knysna Fires that presented us with not only South Africa’s largest environmental disaster in terms of economic impact, but the several billions of Rands of damage were mostly insured. 

This motivated the insurance sector to promote risk treatment and risk resilience going forward to be able to cover similar assets - if these can ever be covered at all again in terms of rising premiums and limited/no insurance possibilities.  In terms of ESG, both insuring and holding of “dirty assets” is no longer acceptable to clients, shareholders and other stakeholders. 

Besides lawsuits and reputational damage, the first clients have completely declined to contract insurers covering coal, oil and gas manufacturers, and the assets themselves, shares in US Dollars tens of trillions worth of companies, many of them “dirty”, may significantly reduce in value and become “stranded” over the coming years, for example, as we shift to renewable forms of energy. 

Renewables represent an excellent opportunity to increase resilience to climate risk.  So, whilst there is some change, growing awareness of climate risk, industry disruptions and a shift to a low carbon economy, these are occurring at pace that is just too slow.

Prof Bent Flyvbjerg of Oxford University in a recent posting reiterated that when it comes to the “tail end” of risk, the most unlikely events, we just don’t know the limit of possible outcomes.  The Covid-19 pandemic has shown us this – almost unimaginable outcomes of a "known unknown". 

He went on to say that; “Many have rightly observed that Covid-19 may end up being a mere dress rehearsal for the biggest and most urgent tail risk we face today: climate change. If climate science is right – and there is no reason to think it is not – the law of regression to the tail will be particularly pertinent here.

It tells us that massive loss of life and wealth will likely follow if climate change is not treated now, at speed, and at unprecedented scale, with no time to waste in each step involved.” 

In other words, if the unknown outcomes of a relatively known risk event like Covid-19 have been treated in the way they were globally and can have these devastating consequences as we are seeing today, imagine how these outcomes might be for climate risk scenarios that are unprecedented for our planet. 

The economic or wealth outcome referred to is important – financial planning and financial resilience is one of the biggest factors of overall resilience, that is why we save for a rainy day (or not).

Looking for an upside, anecdotally, Covid-19 has been good for climate risk. People talk about the great weather we’ve been experiencing of late (coincidence?), satellite pollution maps of South Africa and most other countries clearing up, birds everywhere and dolphins swimming in the canals of Venice (fake news, sorry).

Every risk has its opportunity, for example solving our energy needs now in a more sustainable and resilient way through renewables.  Why build an expensive, vulnerable power plant, when a distributed power array will solve our needs? 

Do we really need to travel and choke our way through smog and peak hour traffic to every meeting? 

Hopefully we learn these lessons, but as risk managers, we must go further, take up the baton and imagine the unimaginable consequences in the big picture. 

Ultimately, the current crisis should elevate the strategic importance of the risk management function and the influence it has. 

We should take advantage of the opportunity this crisis offers - exploiting the valuable lessons learned from the Covid-19 pandemic and improving our resilience for the next crisis.
​
ENDS


MEDIA CONTACT: Rosa-Mari, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za 
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​

Written by: Dr Anushka Bogdanov, Risk Insights, IRMSA Corporate Member

The coronavirus is an unexpected and unplanned global catastrophe, and corporate South Africa has no choice but to step in and assist its employees, however difficult it may be.

Already we are seeing some evidence of this and companies that are rolling up their sleeves are to be applauded.

In these current uncharted waters, proactive governance and managing social aspects both from within and outside company offices are paramount, not only for sustainability but also for survival.

In this respect we should remind ourselves of what Nelson Mandela said when it came to a society coalescing: "If you want the cooperation of humans around you, you must make them feel they are important and you do that by being genuine and humble."  Right now, a little humility will go a long way.

During any time of crisis companies need to re-focus on the important principles of ESG - Environmental, Social and Governance – which refers to the central factors in measuring the sustainability and societal impact of an investment in a company.

This philosophy is now even more pronounced after Government’s declaration of a National Disaster and a weeks-long lockdown which makes the national executive primarily responsible for co-ordinating measures for the mitigation, prevention and recovery and rehabilitation from disaster. 

This in turn means companies have to be responsible for implementing many of these measures. It also means company leaders will find themselves working in a completely different and untested paradigm and will have to adapt quickly.

They will have to ensure continuity management in the organisation, taking heed of the wellbeing of its employees at all times.

Doing this correctly can only enhance the reputation of companies during this difficult time.

Organisations can also use the Corona pandemic as an opportunity showcase their ability to adapt to real crisis management, practically demonstrating robust governance. Disclosure of proactive policies and processes by companies also provides an insight to how well the S (social) component of the ESG impact is being taken into account.

The management of human resource policies and supply chain disruption provides insights to the G (governance) of the ESG of companies.  

This will provide investors and society with strong insights into companies that have a better chance in getting out of the crisis stronger and more productively if they are led by ethical leaders who have taken into account sustainable human capital – the S in ESG.  

Boards of directors and management also need to be fully aware of the Corona impact on the brand and strategic reputation of companies.

The kind of support companies need to provide to their employees ultimately assists in flattening the curve of infection which will range from its supply chain management, work from home, resources and infrastructure, paid sick leave and taking the elderly and pregnant women into account.

It’s also incumbent on corporate leadership to critically and constantly evaluate the dissemination of crucial information regarding the virus to assist employees in making informed decisions.

By doing this companies are reflecting their investments in people but unlike other investments, the dividend will be reaped in creating sustainable competitive advantage and a loyal productive workforce.

It also goes without saying that as part of its governance employers have a legal obligation to ensure a safe workplace.

Now more than ever before a company’s work practices directly affect their ability to contain the virus and manage business disruptions in general.

So critically ask yourself what key questions do you need to ask yourself right now:

• Does your company know what ESG stands for?
• Does your company work towards the seventeen UN global sustainability goals to attain a sustainable future.
• Will your company, whether large or small, be able to answer when asked more sustainability-related questions?
• Does your Exco and Board exert influence and contribute to a sustainable future?
• Are you aware that the environment, human rights and employment terms are general aspects of ESG?

ENDS
 
MEDIA CONTACT: Rosa-Mari, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za 
For more information on IRMSA please visit:
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Authored by: Chandu Kashiram, IRMSA Risk Intelligence Committee Member

COVID-19 has confirmed what Dr Nicholas Crisp had warned us all in the run up to finalising the IRMSA 2020 Risk Report. He warned that the NHI cannot solve all of our Nation’s social ills. Each and every department across the social spectrum has to deliver if the NHI is to succeed.

Assuming that all intentions and plans to install a “world class” NHI system in South Africa are successful, it will still not be enough. COVID-19 has placed the best NHI systems in the world under considerable strain. This is mainly due to the system not taking care of the poor and the indigent.

According to a recent Daily Maverick article by Richard Poplak (27 March 2020), between 1.1m and 1.4m households fall under the informal settlement category in South Africa. This equates to between 2.9m to 3.6m people.

Although the Government has reacted swiftly to put into place the 21 day lockdown, at a practical level the lack of housing, exacerbated by the sheer lack of basic necessities such as running water and ablution facilities, has made the lockdown impractical in poorer communities.

Social distancing is nearly impossible to achieve where the disenfranchised live between four to six people in a little one to two square meter shack. Washing hands and staying germ free is a big ask when most people do not have running water and share toilets across many shacks.

COVID-19 is putting the spotlight on lack of service delivery and has placed the entire Government into fix-it mode, at huge cost to the economy and the people of South Africa.

So what is missing?
COVID-19 is also one of those risk events that is a serious “wake-up call”, not just in our country but the world over. It is forcing each country to take a hard look at the following –

• Basic human needs such as housing / shelter;
• Basic infrastructure such as water, electricity, sewage systems, roads, waste removal etc. - that should provide all our people a safe and clean environment;
• Access to basic healthcare.

The above basic needs are not a “nice to have” but also enshrined in our Constitution as basic human rights.

Preventative Measures
Simple risk management principles require us to identify the risks, and put into place effective preventative and corrective risk mitigating actions.

The Government has put an effective council that is putting plans together and working as a team to beat the COVID-19 virus. Labour and business are also part of taking corrective mitigating actions.

One of the Ministers even mentioned that the process is unfolding into the development of a blueprint on how various parts of government, labour and business can work together in future to deal with any major challenge.

My view is that they should not merely come together to face major challenges or disasters but continue to work together as a matter of course.

COVID-19 should be used to understand and develop solutions for the following -

• speed up setting up of the infrastructure fund that will be required to get our health system to “basic delivery” status;
• Ensure that frontline staff have the necessary PPE and equipment (in this case ventilators) or in another situation burn units etc.;
• Step up education, training and development of healthcare professionals in the area of disaster management;
• Analyse the supply chain to determine key strategic industries that could be local e.g. producing ventilators, masks, hand sanitizers etc. This will assist in creating jobs and making us less dependent on imports;
• The analysis should also consider basic requirements to deal with other disasters such as fire, floods or any other extreme weather events, natural disasters and climate change;
• Build up a national disaster relief fund;
• Accelerate the allocation of “land parcels” to relocate communities to a safer environment;
• Accelerate implementation of basic infrastructure that can provide for the poor and indigent;
• Significantly step up and install appropriate communication solutions to reach all communities in cities as well as rural areas;
• Continue to and sustain training of police and defence force frontline staff in the areas of community policing and crowd control in a crisis situation;
• Ensure that leadership has the ability to take decisive action and to stand their ground, especially when such decisions appear to be unpopular; and
• Develop an electronic / technical solution for the collection of social welfare grants.

Note that the above is by no means an exhaustive list.

In conclusion, we are merely a few days into the 21 day lock down and already many gaps and missed opportunities of the last 25 years of our democracy have been starkly and unambiguously been revealed.

The COVID-19 has ruthlessly placed the truth in front of us all and left no place to hide.

Let us therefore use this opportunity to learn from the mistakes of the past and begin our journey to recreate a better South Africa for all of us. The preventative measures are not aimed at Government only.

Business, Labour and all South Africans have to do their part to build a much more resilient South Africa.

Whilst we contemplate how we will work differently in future, let us also acknowledge to good work government, labour and business has done so far to deal with COVID-19.

Let us also acknowledge the frontline staff, the doctors, nurses, healthcare professionals and each and every person providing essential services during these extremely difficult times. To make sure that there sacrifices are not wasted, PLEASE STAY AT HOME! 

ENDS
 
MEDIA CONTACT: Rosa-Mari, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za 

For more information on IRMSA please visit:
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Authored by: Gillian Le Cordeur, IRMSA CEO

As we navigate our way through this crisis, that not only South Africa but the entire World is dealing with, The Institute of Risk Management South Africa (IRMSA) Executive Committee has highlighted many risks and opportunities associated with the COVID-19 pandemic. 

It is of critical importance to acknowledge that this pandemic is no longer a risk (it is a risk which has materialised) but has become a cause to many other risks emerging on our country’s risk radar.

Two of the most significant risks to have emerged from this pandemic were highlighted; the potential of social unrest and a likely increase in crime. 

Both these risks if left untreated, have the potential to result in riots, looting, damage to property and harm to people.  Not forgetting (on the back of unemployment, the loss of income and poverty) hunger, starvation and desperation.

After intense workshops and discussions with our Executive Committee and stakeholders, IRMSA realised that we need to quickly recommend a risk response strategy to support government and these individuals in ‘hot spot’ areas whom have been deeply affected by this lockdown as a result of the Covid-19 crisis.

Over the last weekend, we watched with concern how citizens in the Alexandra Township responded to social distancing and the SANDF, and it was clear that whilst we are managing the health risk, we will need to address individuals’ access to food.

It is clear that this desperate need for food and basic necessities will be widespread in all townships and informal settlements.

IRMSA feels that this is an opportunity for professionals and business leaders to personally play a significant role in managing this risk which will have an impact not only on all organisations but on every single household and citizen in South Africa. 

After extensive research and engagement with various parties, we made contact with an organisation called FoodForward SA and we will collaborate with this organisation to treat the core of these emerging risks – food distribution to those in need and for those who suddenly are unable to earn a living.

Not only is this the right thing to do but an essential risk treatment strategy to address the consequences of social unrest, starvation, desperation and a potential for harm to, or the loss of life.  

FoodForward SA redistributes edible donated food products and operates as part of the international Global Foodbank Network (GFN).

The organisation has an established national distribution footprint enabled by its verified beneficiary network of over 670 charities and over 255 000 people across the country. They already provide 20 million meals per year – but in the next few days to come and then 4 – 6 months, the need is much more. www.foodforwardsa.org

While organisations that previously invested in developing robust enterprise-wide risk management processes are still experiencing significant impacts from this unfolding crisis, hopefully their leadership teams will align with IRMSA and take up this opportunity to be more proactive and participate in this drive with IRMSA and Food Forward SA.

It is also an opportunity for professionals and leaders to personally to play a significant role in managing this risk which will have an impact not only on all organisations but on every single household and citizen in South Africa. 

In order to be part of the solution to this immediate risk and support those in need, please click on the link to make a donation. (Click here to make a donation)

President Ramaphosa wisely stated that ‘united we are stronger’, and therefore we are proud to announce that  in the spirit of collaboration the Institute of Directors South Africa, the Compliance Institute of Southern Africa, the Ethics Institute, Association of Certified Fraud Examiners SA, Financial Planning Institute of South Africa  and the Actuarial Association of South Africa will be joining this initiative in order for us to have a larger impact and help more people in need. 
We are most grateful to these professional bodies for their support.

IRMSA continues to play a leading role in South Africa and with our theme for 2020, #Risk Activism: Leading the journey to a risk intelligent future, we feel we will most certainly be doing so again with this initiative.

ENDS

MEDIA CONTACT: Rosa-Mari, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za 

For more information on IRMSA please visit:
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​

Civil unrest and a likely increase in crime are brewing if South Africa does not solve the food security problems already emerging, says the Institute of Risk Management South Africa (IRMSA).

The IRMSA COVID-19 Risk Think Tank highlighted these risks based on risk data modelling and taking into account the unique disparities of South Africa.

“It is not meant to spread panic or trigger political narratives,” warns IRMSA CEO Gillian le Cordeur. “It is merely what risk managers do; they use all the information available to predict with as much accuracy as possible future scenarios and recommend solutions to treat the identified risks.”

Both these risks – if left untreated – have the potential to result in riots, looting, damage to property and harm to people as hunger, starvation and desperation rise on the back of unemployment, loss of income and pre-existing poverty.

“The potential for civil unrest is less about the availability of sufficient food and more about the distribution of the available food while adhering to the parameters of the lockdown,” explains Le Cordeur. “Even if the lockdown period is not extended, the impact of the initial 21 days is already predicted to have a major impact on food security for millions of South Africans over the next six months.”

Formal supply chains are robust enough to satisfy the needs of urban areas but many rural areas rely on an informal distribution network that can now no longer operate. There might therefore come a time that even those that want to comply simply can’t because they don’t have money for or access to food and essential hygiene items.

According to IRMSA the treatment of this risk is the immediate support of a network in South Africa that has an established national footprint, has a track record of trusted performance, and can scale as soon as funds are made available. This will ensure that a national effort – in support of Government’s immediate focus on preventing the spread of COVID-19 – is well coordinated to offer maximum assistance to vulnerable communities while minimising the duplication of efforts.

“Once we identified this risk treatment we started the search for an organisation that satisfies this list of seemingly impossible criteria,” says Le Cordeur. “We were relieved to find FoodForward SA; a food redistribution non-profit organisation that has been perfecting their operations since 2003.”

FoodForward SA redistributes edible surplus food products and operates as part of the international Global Foodbank Network (GFN). The organisation has an established national distribution footprint enabled by its verified beneficiary network of over 670 charities that serve over 255 000 people daily across the country.

“We have obtained a permit to operate as an essential service during the lockdown period,” says Andy du Plessis, Managing Director of FoodForward SA. “Our beneficiaries usually receive food and non-food groceries from us on a monthly basis; but we’ve already seen this frequency increase to every two weeks.”

“At the moment the lockdown only allows us to prioritise facilities like shelters, aged care facilities, the disabled, and other at-risk individuals who require much-needed food relief.”

“To add currently underserved provinces and rural communities to our efforts we need just over R50 million as an immediate calculation,” says Du Plessis. “For the sake of transparency and accountability this calculation is available on https://foodforwardsa.org/.”

While the major retailers in SA are already part of the FoodForward SA network, Du Plessis says that SA producers of food items and manufacturers of essential non-food items now need to show South Africans that they care enough to donate products for the next four to six months.

Regular audits by independent as well as partner-appointed providers ensure that the FoodForward SA warehouse storage facilities, supply and cold chain operations, logistics management and transport operations adhere to the strictest of food safety standards.

Before the COVID-19 crisis FoodForward SA had a strategic plan to establish its operations in Limpopo, Mpumalanga and the Northern Cape, as well as strengthen its operations in remote rural areas through FoodForward SA Mobile Rural Depots. The lockdown creates an urgent and immediate need for funds to bring these plans forward as quickly as possible.

“We are ready to serve South Africa as best we can,” says Du Plessis, “but we can only scale up if the projected R50 million can reach us within the next week, and sustained support over the next six months until the threat of civil unrest subsides.”

“In short, we need more food and we need more funds … and we need it NOW.”

CONTRIBUTION OPPORTUNITIES TO KEEP SOUTH AFRICA SAFE:

• Individuals: Contribute any amount via EFT or PayPal
  
• Retailers: Display QR codes (Snapscan and Zapper) linked to the FoodForward SA account at checkout points
• Employers: Use company newsletters, chat groups and social media to encourage staff to contribute
• Community and social networks: Use existing platforms to encourage fans/followers/members to contribute
• For profit companies: Contribute from CSR or surplus funds to secure specific line items as per FoodForward SA COVID-19 Scaled Operations Budget
• National and local government: Allocate funds to secure specific line items as per FoodForward SA COVID-19 Scaled Operations Budget

Contribution details and more information are available at https://foodforwardsa.org/financial-donations/ or from andy@foodforwardsa.org

EDITORS NOTE: IRMSA has reviewed the necessary legal and financial documentation to verify the legitimacy of the intent and operations of Food Forward SA. IRMSA has no stake or share in FoodForward SA or any of its partners and/or beneficiaries. The intent of IRMSA is to proactively highlight to South African individuals, corporates and public sector the potential risk of civil unrest and the recommended treatment of that risk.

ENDS

MEDIA CONTACT: Rosa-Mari, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za 
​
For more information on IRMSA please visit:
Website: https://www.irmsa.org.za/
Twitter: https://twitter.com/IRMSAInsight
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​

Authored by; Walter Ehrlich, IRMSA Risk Intelligence Committee Member

COVID-19 is a numbers game and only a strategic response can alter the numbers. That is true for the country and for your organisation.

If your only focus regarding COVID-19 is to look at operational crisis management you need to rethink your approach.
The war against COVID-19 must be fought by understanding the numbers and responding to them strategically.
If your organisation does not yet have an infection, based on probability, it is only a matter of time before your first employee is infected with COVID-19.

How you respond to that event operationally is important.

However, how you respond to the day-to-day growth in the transmission rate, that will inevitably follow, is of greater strategic importance. This is the battlefield on which your organisation will win or lose the war against COVID-19.

Your organisation must establish upfront trigger points and actions that will come into effect immediately upon the trigger point (a pre-set number) being reached.

At that stage hours will become critical and you certainly won’t have the luxury of time to deliberate and write long motivations to leadership.

Exponential Growth
The phrase is familiar to us but do we recognise what it means?

As risk managers we must understand what exponential growth is, where it comes from, what it implies, and when it stops? Only then can we advise our organisations on how to respond to COVID-19 strategically.

Trust me, I am neither a scientist nor a mathematician but I have made a point of gaining a layman’s understanding of the topic which I want to share with you.

The following resources are useful to gain an understanding on the topic of exponential growth:

1. The problem explained 1
2. The problem explained 2
3. The solution
4. An opinion

The essentials you need to know are that:

• Exponential growth is a fact; it is not open to interpretation, preference, or politics. It is simply a fact.
• Exponential growth is multiplying by a factor greater than 1.
• The only way to stop exponential growth is to bring down E or p.
• An exponential curve cannot continue forever (it is limited by the size of the population) and therefore any exponential curve is really the beginning of a logistic curve.
• The inflection point is where an exponential curve starts to turn downwards and starts becoming a logistic curve.
• During an epidemic the growth factor should be closely followed. It is the ratio of the number of new cases one day compared to the number of new cases the previous day. I have no doubt the NATJOC led by President Ramaphosa and all the other clever folk are following this.
• Your organisation would be wise to track the national and regional rate of growth and prepare to track you organisation’s own growth factor once infection within your organisation commences. And it will, probability tells you so, so bank on it and move forward.
• The rate of infection must be slowed down to mitigate against the healthcare system becoming overwhelmed. The effect of reducing the rate of infection growth is to “flatten the curve” and spread the number of cases entering the healthcare system over a longer period of time.

What should your organisation do, or continue doing, to reduce the rate of infection and bring the inflection point forward?

1. Stringently follow hand washing and sanitising discipline.
2. Stringently follow regular wiping down of common equipment and common touch points.
3. If applicable, equip true frontline staff with the necessary Personal Protective Equipment (PPE) according to WHO guidelines. Don’t panic buy PPE if you don’t need it; leave supplies for those who do.
4. Encourage employees to stop non-essential gathering and traveling in their personal capacity.
5. Implement a social distancing strategy, including a work from home strategy.
6. Communicate to your staff continually, strategically and with the necessary empathy.

In conclusion, we must not panic but we must gain an understanding of these numbers and use them to inform responsible risk-based decision making.

We need to make difficult decisions to make a positive contribution to bring the national, and in time your own, inflection point forward, even if it impacts on your business objectives.

There is no question that there are downsides to implementing certain strategies and every organisation, public and private, is grappling to strike a balance between fighting COVID-19, protecting employees, and running an effective organisation.

We cannot expect government to solve the problem on its own.

Every organisation, public or private, including your organisation must take strategic action to slow down the risk of transmission.  

ENDS

MEDIA CONTACT: Rosa-Mari, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za 

For more information on IRMSA please visit:
Website: https://www.irmsa.org.za/
Twitter: https://twitter.com/IRMSAInsight
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LinkedIn: LinkedIn: https://www.linkedin.com/company/irmsa-institute-of-risk-management-sa//

Created by; IRMSA Associate Member, Renisha Rajpaul
​
The World Health Organisation declared the Coronavirus as a global health emergency, urging that the global community should demonstrate solidarity and cooperation in responding to the outbreak.

At time of writing this report, the coronavirus had infected close to 95,000 people, the vast majority of them in China, killed more than 3300 and spread to almost 30 countries. 

In addition to the health risks, the virus could potentially poses various business risks similar to the SARS outbreak in 2003 which had a global economic impact of around $53 billion.

Impact of Coronavirus:
China is currently the world’s second largest economy and central to a diverse range of global supply chains.

In an effort to contain the spread of the virus, the Chinese government has imposed restrictions on the movement of people which has resulted in manufacturing disruptions, shipping restrictions and international travel bans.

In South Africa the officials have responded by establishing a specialised task team to prevent the spread of the virus, heightening screening at national ports and issuing clinical guidelines for health workers and citizens.

Due to globalisation and the interdependency on China, which is a critical trade partner for Africa, leaders in Africa must understand how the pandemic will affect their organisations and put into place the measures to manage the impact.

Risk management professionals must begin to engage their stakeholders and sensitize their boards on the impact of the outbreak (direct and indirect).

Vodacom, a leading telecommunication provider with presence in over 50 countries offering services to 110 million customers, conducted a high-level impact assessment on how the consequential effects of the Coronavirus could have on South African businesses. 

Supply Chain Management
·     Unavailability of spares and consumables to carry out required maintenance and upgrades.
·     Failure to deliver on key strategic initiatives.
·     Delays or failure to import and export goods and raw materials.
·     Relying on ‘force majeure’ when contravening service level agreements.
·     Inability to maintain equipment and/or vehicles.
·     Declining stock levels.
·     Slow-down and halt of production lines.
·     Negative customer experience.
·     Revenue loss.
·     Job losses.
·     Increase in bad debts due to inability to pay financial commitments.

Professional Services
·     Inability to source professional services from affected regions due to travel restrictions.
·     Disruptions to international shared service centres.
·     Business disruption due to no or slower maintenance and /or support by international shared services.
·     Increased reliance on local shared services.
·     Increased cost.
·     Negative customer experience.
·     Reputational damage.

Sales and Distribution
·     Inability to import goods, devices and accessories to meet market demand.
·     Inability to maintain competitive edge if organisation is dependent on imported items.
·     Inability to grow and/or maintain market footprint.
·     Declining stock levels.
·     Revenue loss
·     Negative customer experience
·     Job losses.
·     Reputational risk

Macro-economic Conditions
·     Decreasing macro-economic conditions can weaken consumer spend.
·     Increasing operating costs and capital expenditure.
·     Revenue loss
·     Increased operational costs
 
Adverse Political Measures
·     High global dependency on Chinese goods could potentially result in increased sanctions and trade controls.
·     Constraint movement of key equipment
·     Travel restrictions, visa and work permit limitations
·     Inability to source key skills that are obtained globally.
·     Xenophobia and social unrest.

Tourism
·     Decline in South African tourism income because of movement restrictions (SA received 95,000 Chinese tourists last year)
·     Inability of informal / small business sectors to continue operations with a dramatic decline in tourist visitors.
·     Declining revenue in whole of hospitality sector.
·     Reduced economic growth.
·     Loss of income for SMEs and Entrepreneurs
·     Increase in unemployment

Global Economic Downturn
·     Tough trading conditions constraining trade and investment.
·     Global slowdown in economic growth.
·     Slowdown in economic activities.
·     Potential economic crisis like in 2008.
·     Over-indebted consumers and companies.
·     Increase in bad debts due to inability to pay financial commitments.
·     Job losses.

Strained Monetary Policy
·     Excessive capital/cash injection by central banks are required in order to sustain the economy.
·     Lower interest rates resulting in slower economic growth.
·     Potential economic crisis like in 2008
·     Deflation (too many rands chasing too few goods)
·     Job losses.

Public Hysteria
·     Unpredictable reaction of people when confronted with a crisis.
·     Deliberate or accidental spreading of fake news.
·     Deliberate bypassing of quarantine requirements.
·     Panic and fear (real or unfounded).
·     Endangering public safety by not adhering to quarantine or reporting requirements.
·     Riots and strike action.
·     Increase in xenophobia incidents.
·     Damage to property.
·     Loss of productivity due to staff remaining home.
·     Customer service impact.
·     Loss in revenue.

Labour restrictions
·     Restriction on movements of “blue collar workers”, especially in other African countries.
·     Restrictions on Chinese contract workers deployed to projects in Africa.
·     Delays in completing projects on time.
·     Increased cost due to delays and potentially having to source alternative contractors.
·     Work permits being revoked/expired due to restrictions on movement.
·     Negative perceptions and xenophobic behaviour against all Chinese people.

Potential Responses Strategies

• Prepare your organisations Pandemic Preparedness Plan along with your Business Continuity Plans
• Diversify multi-vendor ecosystem
• Alternative strategies to counter dramatic revenue losses
• Increase critical goods reserves
• Localise critical skills
• Awareness and information sharing
• Enhanced physical security measures against public hysteria
• Up to date media responses/statements for fake news
• Willingness to compensate affected parties

ENDS

MEDIA CONTACT: Rosa-Mari, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za 
​
For more information on IRMSA please visit:
Website: https://www.irmsa.org.za/
Twitter: https://twitter.com/IRMSAInsight
Facebook: https://www.facebook.com/IRMSAInsight/?ref=hl
LinkedIn: https://www.linkedin.com/company/irmsa-institute-of-risk-management-sa/

Authored by: Chris du Preez, IRMSA Associate

The World Economic Forum (WEF) recently released their 2020 Global Risk Report, the 15th report since its first issue in 2006.

There has been an evolving risk landscape from 2007 to 2020, with Environmental Risk first appearing in 2011 in forms such as: Storms & Cyclones, Flooding, Biodiversity Loss and Climate Change.

​In 2012 the effect of Greenhouse Gas Emissions appeared and by 2013 the risk of Climate Action Failure was first mentioned, remaining one of the Top 5 Global Risks since then.

Since 2017 at least three forms of Environmental Risk appeared in the Top 5 Global Risks according to either Impact or Likelihood.

And for 2020…the Top 5 Global Risks Overall are ALL Environmental Risks:
1.         Extreme Weather
2.         Climate Action Failure
3.         Natural Disasters
4.         Biodiversity Loss
5.         Human Made Environmental Disasters

Even more alarming, Environmental Risks exceed even the threat of Cyber Attacks, which has been expected to be at least in the top 5 risks.

The effect of climate change is striking much harder and more rapidly than many had expected. The last five years are on track to be the warmest on record with natural disasters becoming more frequent and more intense.

The Daily Maverick reported on 10 February 2020 that an Argentinian research thermometer took a reading of 18.3 °C for Antarctica – the hottest temperature on record, surpassing the previous hottest recorded temperature by 0.8°C.

Alarmingly, climate experts estimate that global temperatures are on track to increase by at least 3 °C by the end of the century, twice what was previously warned to be the limit to avoid the most severe economic, social and environmental consequences.

The BBC reported that as on 31 January 2020, the Australian Wildfires have destroyed more than 11 million hectares of bush, forest and parks across the Australian continent.

At the same time, Canberra has seen some of the worst smoke pollution, with air quality rated the third worst of all major global cities on 3 January 2020, according to Swiss-based group AirVisual.

One of the world’s largest fish, the Chinese Paddlefish, has officially been declared extinct National Geographic reported on 8 January 2020.

The increased demand for energy did not help the situation either, with coal power plants built in Asia in the last decade accounting for nearly one-third of the total increase in CO2 emissions in 2018.

Environmental Risk is very real and the established systemic risks even worse:
•           Loss of life
•           Increased stress on ecosystems
•           Food and water crisis’s
•           Increased migration
•           Worsening geopolitical tensions
•           Increased economic and capital market pressures
•           Disruptions to trade, labour and supply chains

The increased awareness of Environmental Risk resulted in the establishment of the Paris Agreement that, with 195 signatories, became effective since 4 November 2016. However, in the transition to a cleaner and greener future, there are also transitionary risks to consider on the technological, societal and economic front.

Today’s youth increasingly demand jobs that are compatible with their concerns about climate change, and without strong environmental credentials, many companies may struggle to attract top talent in the future. Additionally, there are concerns that this specific multilateral process mandated to address climate change loses momentum and action on climate stalls.

The next 10 years will shape the outlook for climate risk for the rest of the century. To avoid the worst consequences, global emissions need to peak almost immediately and decline precipitously—by 7.6% each year between 2020 and 2030.

This implies an additional US$460 billion a year of clean energy investment over the next decade.

The silver lining, however is that the generation of clean energy is increasing and at the same time getting cheaper and creating new job opportunities.

The cost per unit of electricity from onshore wind and photovoltaic solar power plants has dropped by about 70% and 90% respectively over the last decade.

Our job as risk managers is to ensure that we use our influence in the various communities we operate in (Climate Change Bill etc.) to ensure that the correct decisions are made and the risk of a worsening environment mitigated to ensure a cleaner, greener and sustainable earth for our future generations.       
         
ENDS

MEDIA CONTACT: Rosa-Mari, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za  
​
For more information on IRMSA please visit:
Website: https://www.irmsa.org.za/
Twitter: https://twitter.com/IRMSAInsight
Facebook: https://www.facebook.com/IRMSAInsight/?ref=hl
LinkedIn: https://www.linkedin.com/company/irmsa-institute-of-risk-management-sa/

​

The Institute of Risk Management South Africa (IRMSA) has launched its sixth annual risk report, the IRMSA Risk Report SOUTH AFRICA RISKS 2020.

“Our report takes a somewhat different form this year. We conducted a robust “look-back” analysis of the risks included in our risk reports for the last five years (2015 to 2019) providing insights into the reasons for the majority of those risks materialising in this time and highlighting the new skills and new ways of thinking required for effectively responding to risks in these socio-technical, socio-ecological, and socio-economic systems.

We also evaluated key current developments and forward-looking views and considered the scenarios of our experts.  In light of the complex set of risks facing the country, we took an integrated look at what is required to build a risk and resilient country within the context of the three possible IRMSA scenarios,” says Christopher Palm, Chief Risk Advisor at IRMSA.

IRMSA’s analysis took into account the scenarios of three respected scenario planners—Indlulamithi, Clem Sunter and Frans Cronje.

All four scenarios paint a similar picture, with three broadly similar possible scenarios. They are: Perpetual Hangover, which essentially involves continuing as we are; Fake It Till We Make it…Or Not, characterised by lofty goals that are not backed up by taking the hard decisions; and Spring of Hope, which relies on all South Africans taking individual and collective control to build a new national consensus.

 “The report then goes on to identify the top 12 risks and what actions need to be taken to support positive outcomes. We hope that this approach will help leadership in both the public and private sectors, risk practitioners and the public at large to conceptualise not only the risks we face, but also what the consequences of our decisions will be.”

IRMSA research polled 585 risk experts and decision-makers across multiple industries in both the public and private sectors to investigate the top risks. From these conversations, the cross-cutting concern that emerged relates to our country’s ability to deliver on mega projects, in a sustainable manner. In this regard, three themes were highlighted:

• Our economic well-being depends on our ability to undilutedly focus on providing electricity/energy to drive our economy; grow our gross domestic product; and provide opportunities for marginalised individuals to participate in the economy;
• Our social well-being depends on our ability to successfully implement the National Health Insurance programme and responsibly redistribute land, both of which could have multiple benefits for the rest of our economy;
• The above (and many other critical projects in our country) depend on our ability to put the right people in the right jobs. As one expert explained, “It is not that we do not have the skills, it is that we are unable to unleash them in the right roles to build our future.”

These three themes cross-cut the top 12 risks identified in the report:

• Sparseness of unified ethical and visionary leadership.
• Continuing private and public governance failures.
• Failure to root out deeply entrenched corruption.
• Changes in legislation and regulations.
• Ill-conceived National Health Insurance policy and/ or sub-optimal implementation.
• Ill-conceived land reform policy and/or sub-optimal implementation.
• Failure to develop, attract and/or retain talent.
• Extreme weather events, natural disasters and climate change.
• Insufficient electricity and/or energy.
• Disruptive technologies.
• Cyberattacks, data fraud and data theft.
• Failure, delay and/ or sub-optimal implementation of economic reform initiatives.

The report identifies risk treatment options to be taken for each of these risks.

IRMSA Risk Report 2020 also includes an assessment of skills needed by risk professionals, and the initiatives the Institute is taking to help upskill the industry to meet the challenge.

“The final section of the report features advice from leading South Africans as to how we can all work together to turn things around, and make the Spring of Hope scenario a reality,” Mr Palm says in conclusion.

“This is more than a report, it’s a blueprint for action.”

Follow this link for the full Risk Report eBook: https://files.irmsa-techlibrary.org.za/riskreport2020/
ENDS

MEDIA CONTACT: Rosa-Mari, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za 

For more information on IRMSA please visit:
Website: https://www.irmsa.org.za/
Twitter: https://twitter.com/IRMSAInsight
Facebook: https://www.facebook.com/IRMSAInsight/?ref=hl
LinkedIn: https://www.linkedin.com/company/irmsa-institute-of-risk-management-sa/
​

 On 30 January 2020, the Director-General of the World Health Organisation (WHO) declared that the outbreak of the novel coronavirus (“2019-nCoV”) constitutes a Public Health Emergency of International Concern (PHEIC) and issued advice as Temporary Recommendations (TR) under the International Health Regulations (IHR).

The full report can be found here

Since then there has been an upsurge in the news cycle and a plethora of news, both trustworthy and fake.

What is a business leader or a risk manager to do?
Firstly, recognise and state the risk as it could materialise in your organisation: 
For example: Staff may become infected by the novel corona virus which could lead to the death of a number of staff caused by management complacency, ineffective preventative measures and the lack of a preparedness and response plan, which may lead to the mandatory suspension of business operations as the offices of are sealed by national health authorities and the military, as a containment measure to mitigate the spread of the virus.

Secondly, prepare as best you can. Realise that you will never have all the information and all the answers but strive to source the best available information on which to make decisions.

The call to action from the IRMSA Risk Intelligence Committee is as follows:
1.Don’t panic but don’t be complacent. Get prepared!

2. Inform yourself accurately so that you can accurately inform and advise others.

3. Prepare a Pandemic Preparedness Plan (PPP) for your organisation. You could dust off and update an old PPP previously prepared for YOUR organisation but be thorough and do more than change the name of the virus and the date! Update the PPP using the best available information based on your diligent research and study of trusted resources. If you do not have a PPP, now is the time to prepare one and include it in your organisation’s business continuity management framework. Your organisation’s PPP is the core instrument to responsibly guide your organisation to PREVENT an outbreak and to REACT should a suspected case emerge in your organisation.

4. Constitute a “Corona Group” chaired by the CEO or a duly delegated and empowered alternate with the authority to make quick decisions. Staff the “Corona Group” with as few as possible but as many as necessary members committed to taking responsibility, allocating the time, and doing the work necessary to effectively develop and execute the PPP. The “Corona Group” should define the triggers that will activate specific actions by your organisation as and when they occur.

5. Stay up to date by following a few trusted sources. Fake news thrives in times like this; don’t fall into the trap.

A few resources for you to consider are referenced below: https://www.who.int/health-topics/coronavirus
Advice for the public – here you will find downloadable communication posters and other resources for you to print and post in the workplace.

Situation reports – these will help to keep you up to date with concise information. Yes, it does not update as often as the mainstream news cycle, but it is based on more reliable information. Remember mainstream news sites are there to sell advertising space and to keep you hooked on every new snippet of news that comes along. Remember, sensationalism sells!

Media resources – here you will find audio updates and transcripts to study for yourself what was said vs. how it is reported in the media.

Technical guidance – here you will find guidance by topic: country readiness, patient management, risk communication and community engagement, and six other topics. There are also downloadable technical guidance publications covering all the above topics.

Travel advice – here you will find updates on WHO advice for international traffic specifically in relation to the outbreak of the novel coronavirus.

Follow two trustworthy news sites – limit it to one local and one international site.

Follow www.irmsa.org.za to keep up to date with practical advice on how to manage this risk.

ENDS

MEDIA CONTACT: Rosa-Mari, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za 
​
For more information on IRMSA please visit:
Website: https://www.irmsa.org.za/
Twitter: https://twitter.com/IRMSAInsight
Facebook: https://www.facebook.com/IRMSAInsight/?ref=hl
LinkedIn: https://www.linkedin.com/company/irmsa-institute-of-risk-management-sa/