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By Henry Uche [email protected]
Corporate leaders have been challenged to see opportunities and explore them in a risk-ladened business environment, as they scale up their enterprise risk management strategies.
Speaking at a recent conference of Risk Managers Society of Nigeria (RIMSON), a Risk Management expert, Mr. Chibueze Johnson, posited that if there was anytime that risk management was essential in the world, that time is now -as the global environment is currently facing challenges of multilevel dimensions on different fronts and by implications, creating unpredictable outcomes.
The risk manager recalled how COVID-19 took some organizations unaware and posed some challenges of uncertainty to them, of which some of them have not fully recovered because they were not adequately prepared, hence the need to prepare always prepare for the unexpected.
Johnson revealed that geopolitical tensions and rise in armed conflicts like the Ukraine -Russian, Israeli Hamas war; Iran-Israel attacks, economic uncertainties across developed and developing economies; the rise of the BRICS states (Brazil, Russia, India, China & South Africa), increase in oil prices as a result of crisis in the middle east, supply chain disruptions, cancelation of travels and other world threats are some challenges hitting global economies currently, Nigeria not exempted.
He maintained that extreme weather conditions and climate change, (the recent flood in Dubia, the impact of high cost of living pressures and rise in inflations, migrations and “Japa” syndrome, Al generated information and misinformation, Cyber security attacks and vulnerabilities are good examples to ponder and could be horrible shocks to businesses, however; risk managers could explore them for organizational growth and social impact.
“These developments has created uncertainties and new risks given their interconnectedness and impacts on existing’s risks. With the challenge of uncertainties such as in our VUGA world Volatility, Uncertainty, Complexity and Ambiguity, risk management requires that we bring out a whole new level of resilience as professional risk managers.”
He highlighted some other top risks to watch out for according to World Economic Forum survey top global risks in 2024. They’re include: Al-generated misinformation /disinformation; Societal and/or political polarization; Cost-of-living crisis; Cyber Attacks; economic downturn.
Others are: Disrupted supply chains for critical goods and resources; escalation or outbreak of armed conflict; attacks on critical infrastructure; disrupted supply chains for food; Censorship/erosion of free speech; disrupted supply chains for energy; public debt distress; labor shortages; accidental or intentional nuclear event; violent civil strikes and riots; accidental or intentional release of biological agents Institutional collapse within the financial sector; housing bubble burst and tech bubble burst.
“Changes in legislation and regulation (e.g., tariffs, economic sanctions, protectionism, Euro-zone disintegration; Cyber incidents (e.g., cyber crime, IT network and service disruptions, malware/ ransomware, data breaches, fines, and penalties; Macroeconomic developments (e.g., inflation, deflation, monetary policies, austerity programs); as well as Market developments (e.g., intensified competition /new entrants, M&A, market stagnation, market fluctuation) are enough reasons to sit up as risk managers.
“Climate change (e.g., physical, operational, and financial risks as a result of global warming); Theft, fraud, corruption; Political risks and violence (e.g., political instability, war, terrorism, coup d’état, civil commotion, strikes, riots, looting); Energy crisis (e.g., supply shortage/outage, price fluctuations); New technologies (e.g., risk impact of artificial intelligence, connected/ autonomous vehicles, lithium-ion batteries, electric vehicles, Metaverse) and business interruption (including supply chain disruption) calls for critical thinking and actions.
To squarely manage risks, he urged his colleagues across the country to painstakingly and conscientiously establish the context, identify the risk, analyze the risks, evaluate the risks treat and control the risks involved, monitor and review them as well as communicate the right information to relevant authorities for execution.
“Risk could be mitigated, accepted, avoided or transferred, nonetheless, taking proactive steps position the risk manager to plan better and take informed decisions.
“Every entity whether for profit or otherwise exists to create value for its stakeholders. Enterprise Risk Management, ERM therefore, protect and enhances enterprise value; enhances corporate governance; aligns strategy and corporate culture; successfully responds to changing business environment.
“ERM also builds the confidence of stakeholders, respond in a manner that reduces the likelihood of downside outcomes and increases the upside and meet externally imposed obligations.
“As business opportunities and risk are constantly changing in todays challenging global environment, there is a need for identify, assess, manage and monitoring organizations business opportunities and risks, to be competitive.
“Risk Managers must know how their organization can take practical steps to link opportunities and risk when managing their operations for greater stakeholders value whilst benchmarking global standards. We must note that no company can isolate itself from the global trend in risk management, and the way forward is to learn the skill, play the role and gain the benefits,” he affirmed.
