The year 2016 was obviously full of risk lessons to learn. All of us (individuals, the industries and the government) must have learnt from these risky occurrences which posed challenges to the way risks were ‘hitherto’ managed. It is hoped that these lessons will prepare us for the upcoming challenges in this new year.
I learned from the lesson of the past year how a great country like Nigeria suffered so much foreign exchange fluctuations mainly due to neglect of (concentration) risk management. I have learnt also not to concentrate all my efforts on public sector business which could be very juicy but yet, volatile.
The experience of TSA has shown me that with public sector business, you may be a champion today and a non performer tomorrow. As a risk manager therefore, I will always diversify rather than concentrate my portfolio.
I learned not to invest any of my hard earned income on questionable, mouth-watering deals eg MMM, no matter how ‘beautifully’ packaged. A nexus must exist between risk and return. If it is too good to be true, then it is too good to be true.
I learned also that it is MMM today, after sometime another similar scheme will come out.
The truth is that there has always been, and there will always be greedy schemes that defy ‘common’ risk management logic ( remember Nospetro, Umana Umana, Forum Mortgage Bankers etc). I learned, unfortunately, that many of the victims of these perennial frauds are bankers and those who ordinarily should be in a better position to advise against it.
I learned to beware of ‘TRUMP Risk’ whereby a Presidential Candidate won election partly through the help of cyber-mercenary.
This (TRUMP) Risk has introduced new dimensions not only to democracy but also to the business world. For instance, very big rival organizations can simply use the same cyber warfare to discredit the products of their competitors. Also, olden day colonization (where the bigger, stronger countries took up arms against smaller countries in order to colonize them) has now been replaced by modern day Cyber-Colonization, courtesy of TRUMP.
I learned also to beware of BREXIT risk where a nation can just rise up and take a decision that would set the markets tumbling worldwide and permanently alter their own ‘destiny’. I have also learnt not to neglect the ‘masses’ in any set-up, either political or business. For instance, those who voted in favor of BREXIT are the commoners who do not really understand the implication of their choice. In organizations, many risks are taken at the lower level whereas risk management discussions and capacity building are only for the C – Suites. Those who incur risks (for the organization) at the lower levels are not aware of the implication of their actions and are not exposed to training that can enhance the awareness. The implication of this will surely manifest. It is only ‘a matter of time’
I learned that risk taking is inevitable in business and that risk can only be managed at ENTERPRISE level for sustainability. What we have in most organizations today is SILO risk management which cannot stand the test of time.
So, what is my New Year risk resolution?
As the Risk Manager of my organization, I will expose myself and the members of my team to current and best practices in Enterprise Risk Management;
I will set a new, realistic and attainable goal for managing risk in my organization;
I will admonish the directors to set a realistic risk appetite for our organization, knowing ‘fully well’ that every other strategic pursuits follow the ‘defined risk appetite’. Moderation is, traditionally, an inbuilt risk management strategy.
I am ready to learn, unlearn, relearn and gather as much exposure and knowledge in enterprise risk management.
I will also ensure that the lower cadre staff are ‘carried along’ in the risk management journey.
As for me and my organization, we are ready this year to join the foremost Risk Management professional body in Nigeria, the Association of Enterprise Risk Management Professionals AERMP, where risk management knowledge dissemination is a topmost priority.
What about you?
You are welcome to the thought – engaging series, the risk alert, for the year.