 Written by Adv. Modidima Mannya, IRMSA Risk Chat Contributor
There cannot be any doubt that the coronavirus disease of 2019 (Covid –19) has redefined the world in general and the work environment in particular. In the work environment, the Compliance and Risk Officers probably have the most complex tasks of ensuring that businesses stay afloat. While the Finance Officers battle to manage budgets and make do with limited and constrained financial resources, the Human Resources Officers battle with the implications of having to retrench, the Strategy and Marketing Officers battle with business repositioning and more importantly; the Compliance and Risk Officers ought to be battling with the complex compliance and risk environment, which has since developed during this pandemic. Compliance and risk management is not necessarily taken seriously in many organisations. Most Compliance and Risk Officers are misunderstood, avoided andor even disliked. This is mainly because at the end of the day, they tend to ask pertinent questions and raise issues which determine the life and future of an organisation and its staff- issues that management don’t necessarily want to deal with, or merely just not ready to deal with. The changes brought about by Covid–19 complicates an already complex operating environment for Compliance and Risk Officers. The compliance requirements of Covid–19 has added to the pressures experienced by the Compliance and Risk Officers. Business continuity and operational survival of any organisation is now entirely dependent on the risk management’s capacity to effectively manage compliance and risks. The new normal has heightened the risk profile of every organisation and redefined company’s strategic risks. This means that the Compliance and Risk Officers must now adjust to discharging their responsibilities in a high-pressure environment. It is in moments like these when matters detrimental to the organisation, like corruption, mismanagement and various other acts can expose an organisation to serious high operational risks. Many organisations faced a sudden shutdown where even existing business continuity plans could not be implemented. Those who could have staff work from home were suddenly faced the additional cost of providing staff with work-from-home resources. In many instances, emergency procurement became the buzzword. Labour intensive and small businesses were forced into immediate and unplanned retrenchments. This is all evidence that risk management was not taken seriously, or has not worked as it should have. Compliance and Risk Officers have to work through these various controversies and complexities to define and ensure good governance in an abnormal situation. The first immediate challenge is whether leaders of organisations appreciate that every single decision must now be compliance and risk informed. Equally, Compliance and Risk Officers face the critical challenge of appreciating that they now work in wholly undefined environment which requires thinking on one’s feet. As government eases lockdown and businesses re-open and more social and economic activities take place, Compliance and Risk Officers need to be able to critically analyze the implications of any activity associated with their organisations for effective inputs. The normal approach to compliance and risk management is mitigation. In the current environment, risk prevention and immediate elimination is the new normal. As an example, infection control and prevention measures determine the future of any organisation. Compliance and Risk Officers are now required to do advisory and implementation work, as well as monitor the work (and processes) being carried out by the organisation. It is no longer enough to have a compliance and risk plan and expect the risk owners to implement. Compliance and Risk Officers are now part owners of compliance and risk issues. This is also partly because policies remain unchanged, and in many instances, they are no longer applicable. Furthermore, it is vital that decision making must be rapid and decisive, if a catastrophe is to be avoided. Malfeasance is generally an opportunity issue. Those entrusted with managing resources often take advantage of situations such as this. Heads of organisations are unlikely to cope unless they have a dedicated compliance and risk capability which enters the arena when necessary. As every decision depends on compliance and risk, decision making must incorporate the advice of Compliance and Risk Officers. The current situation is new to many if not all organisations and may not have precedent. That is however not a defence available to a Compliance and Risk Officer. Compliance and Risk Officers have always worked outside a defined framework. Whatever the policies, rules and plans, Compliance Officers and Risk Officers rely more on critical analysis skills than defined industry frameworks and practices. In the context of the current situation, it is Compliance and Risk Officers who can advise better how people can relate to each other in the workplace, who must be there and what must be in place It is the Compliance and Risk Officer who can tell better, who must be allowed to drive the truck or make tea. It is the Compliance and Risk Officer who can tell better which door of the building to use and how staff must behave whilst at home. It is the Compliance and Risk Officer who can tell whether the right quality of sanitizers should be procured. It is these basic things which determine whether an organisation can open its doors and remain operational. It is the Risk and Compliance Officers who can tell better whether it is worth retaining staff or spending money an organisation does not have. Therefore, Compliance and Risk Officers should assess whether:
MEDIA CONTACT: Rosa-Mari, 060 995 6277, [email protected], 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/
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“Resilience is the key to enabling business growth in a hostile market environment,” says Christopher Palm, Chief Risk Advisor at the Institute of Risk Management South Africa (IRMSA).
In its most general human context, resilience is defined as “the ability to recover from or adjust easily to misfortune or change”. Expanding this basic definition then one will need to have the ability to anticipate, respond and adapt to, and/or rapidly recover from a disruptive event – in other words to “keep going” – it doesn’t have to be pretty or convincing it just has to have a preventative capacity as well as an adaptive capacity in response to the disruptions. In fact, those that achieve perfect resilience, that is, avoid interruptions altogether, are transformed by it. “Every time a business anticipates and counters all threats at its current level, and learns from it, it then empowers itself to operate at a higher level, thereby compounding its gains,” says Palm. With nothing holding it back, it can focus on and elevate its growth strategy. So how can organisations acquire resilience? What makes an organisation resilient? While the function of a business is to deliver goods or services to a market that needs them, its purpose is to grow. Sole proprietors and corporate shareholders alike invest their capital into a business hoping it produces a tidy return on investment. The more market share it can gain, the higher the returns. Yet, when adverse conditions in its internal, market or macro environments delay its progress, its growth trajectory veers ever further from its original projections. The sole proprietor loses faith.Corporate shareholders lose confidence. The business loses ground. It seems obvious that an organisation should understand its various environments and identify the threats and opportunities within each. It will then be able to respond to the risk, at the very least, develop the means to continue operating in spite of them, and, equally and maybe even more importantly to also leverage the opportunities identified. At best, its growth will not be disrupted at all. At worst, it will be able to recover operations rapidly with minimal impact to its progress. So, a business’s ability to anticipate and either avoid or counter setbacks and responding to opportunities with agility must be a core ingredient of its resilience. Resilience, therefore, is a direct product of integrating strategy development and execution, effective risk management, business continuity planning and excellent decision-making. Transformation However, according to Palm, resilience shouldn’t just be about being able to rapidly bounce back from disaster. Rather than a set of preventive and corrective steps, it should have a lasting impact on the organisation’s capabilities. “True resilience means a business has transcended the risks that threatened to prevent its growth and has transformed itself to achieve greater performance because of it,” he says. For an organisation to truly benefit from resilience, it should integrate what it has learned into its strategy. This means that resilience should be highly valued by its leadership and risk management must be deeply integrated into the strategy development process. Conclusion So, organisations that build up their resilience will be better able to protect their growth and be transformed by what they have learned. Since resilience is the direct product of risk management and business continuity planning, it follows they will reap the greatest benefit if risk management is a permanent component of their strategy and decision-making. “Businesses that want to grow without hindrance must realise that risk management and business continuity planning are no longer obligatory support functions. Rather, they are accelerators of business growth,” says Palm. ENDS MEDIA CONTACT: Rosa-Mari, 060 995 6277, [email protected], 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/  Written by Lindiwe Magobholi, IRMSA Member
Enterprise risk management is in its nature intended to manage risks of an organisation holistically. It is a reality that for many years enterprise risk management has struggled, with some organisations still battling to keep its seat at the roundtable, because although it is not a profit centre function it sometimes behaves as one. It is seen as a value add as opposed to being a contributor to the bottom line. Risk managers have been putting policies in place to ensure that organisations are resilient whilst achieving their strategic objectives. Simply put, optimising risk for reward. Scenarios are developed in order to set risk appetites to safeguard the business from any known event. The most difficult questions any risk professional faces when managing risk appetite is:
By nature, people are optimistic – rightly so. But it is our job as risk managers to be pessimistic and think of the “out of the ordinary” or “black swan” or "outliers" situations and manage the business against these risks whilst harnessing the opportunities therein. The objective is to ask,
As we were enjoying the new year, COVID-19 had started to wreak havoc in other parts of the world, and I wonder if we as risk professionals, were already paying attention to the pandemic and what conversations we were having in our emerging risks discussion with oversight committees. Did we imagine this wave ever reaching our shores? Certainly, the COVID-19 wave hit the shores of the Republic and President Ramaphosa declared a nationwide halt on all economic activities. As Professionals, we had to act on our feet whilst hiding in our homes with our children in fear of our lives and as the proverb goes “the rest is history”. Like Joseph`s dream in the good book of life the 7-years of famine are here and therefore Joseph’s emergency plan/fund must be activated, and like anything in life, the emergency plan goes through gruesome tests. As the media reports highlighted recently, it is very clear that many businesses are not resilient enough to survive the pandemic. As businesses were mandated to close in an endeavour to prevent the spread of the virus and only essential services were permitted to continue to provide much-needed services, we witnessed most businesses:
The South African Television News channels ENCA and Newzroom Africa ran a story on the 10th June 2020, indicating that business confidence fell to its lowest in 45 years, with all economic indicators signalling a crisis. The South African government introduced a Relief Fund to provide relief to those that are hugely impacted by the pandemic, the SARB relaxed its liquidity requirements and the financial services sector pledged to assist the economy with debt-relief measures including credit life cover, and yet all these measures are proving not to be enough. According to Statistics South Africa, by the end of 2019 the country was already in a technical recession. The pandemic is unprecedented and no one could have foreseen its impact but consequently, it was very evident the one month of “no trade” was catastrophic for most organisations or those that had reserves for less than a month to survive. It begs the questions:
Everyone at the roundtable should always consider the impact of a business failure on the most vulnerable citizens of this country – because that is a picture of a country that cares about its people. This pandemic has reminded us that in life, winter will always come, and we must be prepared for it. ENDS MEDIA CONTACT: Rosa-Mari, 060 995 6277, [email protected], 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/ |
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