Unemployment tops risk list for South Africa

Structurally high unemployment tops the risk list, according to the Risk Report 2019 from the Institute of Risk Management South Africa (IRMSA). That is followed by growing income disparity and inequality. Good news includes unmanageable fraud and corruption dropping from second to fourth on the list. But it is no surprise that inadequate and/or sub-standard education and skills development is at number five on this year’s list, given that structurally high unemployment has topped the list for the second year running. In terms of risks to respondents’ industry sectors, the report ranks failure of governance in the public sector as the number one risk, followed by inadequate and/or sub-standard education and skills development. Cyberattacks (ransomware, algorithm shutdown of the internet of things) drop from the biggest risk of 2018 into third position, but are followed in fourth by information security: data fraud and data theft – the first time that has made it onto the list. Disruptive technologies (AI, internet of things, robotisation) rank eighth on the risk list – another first-time appearance. Two risks making a return in 2019 are brand and reputation. Loss of brand and reputation do not feature on the country risk profile and are relatively low on the industry risk profile. IRMSA states: “Reputation risk is often termed as the ‘risk of risks’, both for countries and for organisations. This is exacerbated by social media and other technologies that enable people to share information and opinions widely and swiftly. “Reputation risks are one of the most challenging risks to identify, assess and to protect [against]. This has led to a situation where in many risk registers, reputation risks are omitted or hidden as much as possible so as not to show up and [force a confrontation of] our inability to manage this risk in a structured and sophisticated way.” It also reports: “Energy price shock, as a risk, is new to the South Africa risk profile and the insufficient supply of electricity is back on, after a year’s absence. These are, however, not the only risks associated with South Africa’s energy portfolio. Energy is a key risk in any economy and particularly in the South African economy, due to its energy-intensive nature and low readiness for the energy transition.” In his introduction to the report, Pravin Gordhan, South Africa’s minister of public enterprises, writes: “Risk managers are in a unique position to connect the proverbial dots – finding the linkages and trends in information, vertically and horizontally, from a number of different planes that enable you to navigate the level and pace of complexity of what we are going through in the world and certainly in South Africa.” Calling on risk managers to lead the way in identifying the risks, he adds: “We live in a complex world with high levels of uncertainty and constant change. The scale and pace of global and domestic change profoundly influence the nature and dynamics of our politics – either in the manner in which certain disputes will be resolved expeditiously and/or in how new obstinate problems are actually created. “There are fascinating dynamics emerging between advanced economies and emerging markets. The kind of capital flows that occur are hugely affected by sentiment, posturing, perception or political chauvinism.” Pointing to the risks associated with income disparity, Mr Gordhan notes: “Important questions arise about how national incomes are shared between elites – whether they be business, political or social elites, and the ordinary citizens – be they middle-class, the poor, employed or unemployed. We have serious challenges in how to create a more equal society, in how to refocus our attention on social justice to be a crucial pillar in the kind of future that we actually anticipate.” Overall, he concludes: “The lesson for all of us is that the risk management profession plays a key role in leadership. You are actually the profession that should be connecting the dots. My key message for the risk profession is that we are living in the new dawn, we have new opportunities ahead of us and while there are many risks out there, there are also huge opportunities. “You, the risk professionals, have to help us understand how the world is unfolding and where the risks and opportunities are, so that we can effectively respond to our country’s structural deficits.” IRMSA CEO Gillian le Cordeur adds: “2018 was a year where we felt the shift in our landscape even more. We watched as many organisations have been hit hard, whether it be through governance breakdowns, reputational risk or mismanagement, and it has allowed our profession to tackle the opportunity that has arisen and ask the question: ‘So where was risk management?’ “It allowed us to probe and have the hard conversations [that] are required by leading risk professionals and business leaders.”

Unemployment tops risk list for South Africa

Want to read this article?

Read Next

Ferma members told AI will bring risk and reward for corporate insurance buyers

Warmer climate spreading risk of malaria and dengue to new regions

UN launches new net-zero insurance forum to replace NZIA

The Netherlands sued over PFAS contamination

Marsh launches global alternative risk solutions practice

Ferma members told AI will bring risk and reward for corporate insurance buyers

Warmer climate spreading risk of malaria and dengue to new regions

UN launches new net-zero insurance forum to replace NZIA

The Netherlands sued over PFAS contamination

Marsh launches global alternative risk solutions practice

Want to read this article?

Read Next

Ferma members told AI will bring risk and reward for corporate insurance buyers

Warmer climate spreading risk of malaria and dengue to new regions

UN launches new net-zero insurance forum to replace NZIA

The Netherlands sued over PFAS contamination

Marsh launches global alternative risk solutions practice

Related Articles