Risk Management Challenges in South Africa

“The future belongs to those organisations that can integrate strategic management, risk management, enterprise performance management and integrated reporting. Get them all right and you own the future. No wonder that integrating these disciplines is becoming the essence of true strategic risk management.”—André Bezuidenhout, head of risk management and compliance at the South African Reserve Bank.

Managing risk has long distinguished the corporate winners. Yet in today's hazard-strewn landscape, bosses struggle to trust that their strategies will unfold as scripted.

Strategic risks—those tied to or spawned by business choices—now ambush with alarming speed, turbocharged by social media, mobility and big data.

“Risks are proliferating amid shifting business terrain, novel technologies and ever-tighter global-local ties,” notes Colin Hill, senior solution manager for risk management and financial crimes at SAS South Africa. “Thankfully, the data deluge has spurred tech advances that arm firms to decide wisely in this high-velocity risk world, where alacrity spells survival.”

Laggards in innovation court disruption, its dark sibling. No surprise, then, that strategic risk tops the fret-list for South African executives. Most firms now tackle it head-on, beyond the old reliables of operations, finance and compliance.

Their gaze has widened, too: not just strategy-killers, but any threat to enduring edge and performance.

Reputation tops global risk worries, and South Africa is no exception—social media's instant megaphone makes brand control a Sisyphean task.

Local bugbears abound: economic drift, talent wars, political meddling, business-model flux, energy and supply squeezes, plus labour unrest. These loom largest, mirroring the strategic bind of domestic firms, who prize human capital, innovation pipelines and collaboration as key assets.

As Thomas Friedman dubbed it in the New York Times, the “Great Inflection”—social media, cloud, 4G, bandwidth and mobiles—has hyperlinked the world, rendering risk mastery imperative.

Recasting Strategic Risk

South African firms once fixated on spotting strategic perils; now it's about reshaping strategy to harness and hedge them. Local headaches dominate: corruption, fiscal crunch, credit downgrades and recessionary blues heighten strike risks, underscoring competitiveness gaps versus global rivals. Tech disruptors pose both peril and prospect, especially as geographic push ranks high on agendas.

Charting Risk's Course

In a world where risks crystallise in an instant, South African firms crave fresh tools and mindsets. They now eye a broader risk-asset palette—folk, IP, clients, marketing, even crowdsourcing—tougher to gauge, leverage or insure, demanding vigilant oversight.

To preempt tomorrow's gales, firms must peer outwards: scouting strengths, snags and openings from clients, bloggers, trendsetters and analysts. Cross-industry lessons beckon.

Global strides in strategic risk are evident, but gaps persist. With risks accelerating and innovation paramount, openness to bold ideas is non-negotiable.