Risk managers have opportunity during Covid-19 crisis

Risk-adjusted strategy, business continuity, crisis management, disaster management and resilience – these have all been buzzwords in today’s media, business and, surprisingly, people’s day-to-day conversations. While this first global pandemic in more than 100 years presents mega challenges for businesses and society at large, it also presents opportunities for a risk manager, according to Mighty Mhlanga. A member of the Institute of Risk Management South Africa, Mr Mhlanga said: “As risk managers, ours jobs mainly consist of identifying threats and opportunities to our company’s short-, medium- and long-term strategic objectives, and presenting response strategies to tackle these uncertainties. “To date, this hasn’t been seen by business to yield the requisite value it promises. The Covid-19 pandemic clearly presents us, risk managers, with an opportunity to launch and strengthen our value proposition.” He said that companies have, in the past, been reluctant to invest in risk management activities, risk response strategies, business continuity testing and crisis management. These have all been seen to be providing no tangible value to the bottom line and were rather viewed as impediments to the day-to-day business operations, he added. However, Mr Mhlanga believes: “The current crisis has highlighted the importance of investing in resilience efforts. Business leaders who have always viewed risk management and business continuity as a tickbox exercise find themselves struggling to respond to the ‘new normal’.” He added that, while many may argue that no one predicted this pandemic, “my fellow knowledgeable risk managers will tell you that this risk has always featured on the World Economic Forum’s (WEF) Risk Report, but because it is a high-impact/low-probability risk, it went unmonitored and eventually caught all of us by surprise”. Going forward, he said, preparedness even for these high-impact/low-probability risks is important for all businesses to thrive under the most trying of times, and risk managers should be in the driving seat to ensure that scenario planning and modelling, crisis management planning, business continuity plan development and testing occurs. These should consider all possibilities and stress test the company’s ability to withstand all imaginable and unimaginable negative impacts. Companies with effective business continuity plans and agile business models have been able to navigate through these tough times and continue to be bullish in their business prospects during and post-Covid-19, said Mr Mhlanga. “To illustrate this point, Ethiopian Airlines, Africa’s biggest airline, doubled up on its cargo capacity in the early stages of the pandemic to take advantage of the upward trend in cargo demand, while its core revenue business was taking a knock,” he said. Citing another example, he added: “Commercial banks seamlessly resorted to their work-from-home strategies, which are continuously tried, tested and improved to ensure preparedness for any disruption. “Also surprising to many was Amazon, whose financial performance continues to reach unprecedentedly high levels during this pandemic. These are examples that we should learn from as we try to find solutions to our current problems.” As countries emerge from lockdown, Mr Mhlanga suggested: “While we should not be shortsighted and lose sight of our already identified strategic risks, the operating environment will probably never be the same again and we should review the current risk profile in line with the landscape change. Emerging risk identification and monitoring remains critical to our crisis response efforts and should take precedence.” The WEF recently released a Covid-19 Risks Outlook, which identified the following seven emerging risks as the most worrisome for companies. This report outlines the most likely and concerning risks for the world and companies in the next 18 months. “The question we should ask ourselves,” said Mr Mhlanga “is: have we identified all the emerging risks to our businesses’ financial, operational and commercial resilience, and are we monitoring these at least weekly? It perhaps sounds a tad extreme, but the reality is that all baseline forecasts and underlying assumptions are changing at unprecedented speeds and we need to keep up the pace.” On a individual level, he said the question is whether risk managers are stepping up during this tough time to make their mark with the c-suite – something risk managers have always yearned for. He concluded: “While Covid-19 presents a lot of uncertainty and challenges for our businesses, country and the world at large, there may never be a better time for a risk manager or chief risk officer to present risk management as an integral part of running a business than today.”

Risk managers have opportunity during Covid-19 crisis

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