Keeping one eye on the future

Business is operating in an unusual environment and is facing uncertainty, complexity and ambiguity.

That was the stark message from Ansie Ramalho, senior consultant, International Finance Corporation, when addressing delegates at the Cruywagen-Irmsa Risk Lab in Cape Town.

Her words were echoed by Elias Masilela, executive chairman of DNA Economics and commissioner of the 1st and 2nd National Planning Commission.

He agreed: “We are entering a more complex terrain. The risk environment is changing – traditional risks are not the only ones you need to think about.

“Most of the challenges are not on the factory floor but challenges from the environment in which we operate.”

For South Africa, he said, one of the largest challenges remains the extreme inequality. “If we do not invest in ending the inequality, we will not survive,” he warned.

Other major risks worrying CEOs and which should be concerning risk managers include environmental fragility, which extends beyond water shortages or floods, to problems like a lack of power and limited access to utilities for all.

This extends to communication and the lack of access to the internet for many Africans.

Insufficient skills are also on the list of concerns – not having access to a skilled workforce but also the threat posed by a failing education system, which means increasing numbers of young people are entering the jobs market with a low educational base.

There are also competition threats, particularly if there is low integration with global markets. This impacts on available customers and limits the overall scope of business.

Asking a group of 76 CEOs from the public and private sector what keeps them awake at night, Mr Masilela said the resounding conclusion was the state of the economy.

The concern among the CEOs was that the economic problems facing South Africa would take a long time to resolve.

Betty Spencer, director of risk management at the National Department of Arts and Culture, said the tone from the top was hugely important.

Poor decision-making led to poor management, she said. Equally, it was crucial senior management did not just keep their eye on the surrounding environment.

“What also worries me,” she said, “is what people are doing when the person at the top is not watching.”

Ms Ramalho advised risk managers to think differently. Do not put the business into silos, she said, because that will not work for a world in which everything is so connected.

She also suggested risk managers stop thinking about cause and effect in a linear fashion.

“Our world is a spider’s web,” she said, “with lots of knots and connections.”

She advised risk managers to concentrate on the knots where risks coincided, but Ms Ramalho also told them to stop being passive observers and instead to engage with the world.

“The only way to come to terms with the new operating environment is to come to terms with it,” she stressed.