By Mighty Mhlanga IRMSA Certified Risk Management Practitioner
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 over 100 years presents mega challenges for businesses and society at large, it presents opportunities for a risk manager.
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As risk managers, our 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, an opportunity to launch and strengthen our value proposition.
Companies have in the past been reluctant to invest in risk management activities, risk response strategies, business continuity testing and crises management.
These have all been seen to be providing no tangible value to the bottom line and rather viewed as impediments to the day-to-day business operations. 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 tick-box exercise find themselves struggling to respond to the ‘new normal’.
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.
Preparedness even for these high impact – low likelihood risks is important for all businesses to thrive under the most trying of times and risk managers should be in the driving seat to ensuring 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.
Agile business models
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.
To illustrate this point, Ethiopian Airlines, Africa’s biggest airline, in the early stages of this pandemic, doubled up on their cargo capacity to take advantage of the upward trend in cargo demand while their core revenue business is taking a knock.
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Another example is commercial banks who seamlessly resorted to their work-from-home strategies that continuously get tried, tested and improved to ensure preparedness for any disruption.
Also surprising to many is Amazon, whose financial performance continues to reach unprecedented high levels during this pandemic. These are examples that we should learn from as we try to find solutions to our current problems.
Whilst we should not be short-sighted 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 risks identification and monitoring remain critical to our crisis response efforts and should take precedence.
The WEF 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 is, have we identified all the emerging risks to our business’ financial, operational and commercial resilience and are we monitoring these, at-least, weekly?
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.
At a personal level the question is, are you stepping up during this tough time to take up space and make your mark in the c-suite, something we as risk managers have always yearned for?
As risk professionals, we should be positively contributing to, if not leading all discussions around the response to the current crisis, returning to normalcy and sustainability of our businesses.
Whilst 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.
Fellow risk professionals let us use this opportunity to rise to the occasion and take advantage of this crisis by demonstrating to our leaders that risk management can help preserve and propel business value.