African Business Leaders Ahead Of Global Peers In Risk Management Says PwC
Executives and board members in Africa-based companies are taking effective steps to address risk strategy and management, placing them well ahead of their global peers, according to a PwC report, “Risk in Review 2015.”
Constant political, economic and social developments have raised concerns among African businesses, in addition to inadequate infrastructure, improper access to healthcare and food security as well as effects of climate change.
Though penetration of technology in Africa is on the rise, it isn’t consistent. Simultaneously, there has been an increase in awareness of cyber crime and cyber terrorism.
“Business risk is everywhere – external and internal, interconnected, growing and ever-changing,” said Anton van Wyk, head of risk assurance services for PwC Africa. “Executives and boards know it, and they are concerned.”
More than 350 executives in 27 African nations were surveyed for the report. According to respondents, top risks that are likely to affect the companies include regulatory complexity (84 percent), technological and IT-related risk (84 percent), government and policy changes (81 percent) and inadequate infrastructure (74 percent).
“Our survey findings suggest that these shifts are opening capability gaps in risk management, particularly in the areas of regulation, data risk management and building organisational resilience,” said Carmen Le Grange, business resilience leader of PwC Africa.
Cyber risks were highlighted by a significantly higher proportion of African respondents (38 percent) than their global counterparts (23 percent). Failure of new IT systems to deliver expected benefits and lack of technology skills to support new digital strategies ranked among the top technological risks by respondents across all industry sectors.
Another concern was the exposure created by the interconnectivity of IT systems, brand or reputational risks from social media and open-web communication. Cyber-crime requires improved mitigation strategies. Changing consumer behaviour is the top-rated market opportunity in the survey and its significance has escalated substantially given the rise of social media, digital and mobile channels, said the report.
On the other hand, the report highlighted the need for risk analysis, which is typically anchored in historical data. There needs to be a big shift into forward-looking analysis built around scenarios, stress and sensitivity analysis. This also requires subjective judgement, which has to be applied to a greater extent. This will be a challenge for some, as many risk professionals are reluctant to break away from data-driven models and controls, said the PwC report.
For African respondents, bribery, corruption and fraud did not feature as high up the list. The survey has suggested that this could be due to organisations embracing challenges of anti-bribery compliance and starting to build workable compliance programs that mitigate bribery risks.
Read more at AfricanReview.