Covid-19 has cemented role of risk management
Covid-19 has had a negative impact on numerous sectors around the world and Kenya’s pension industry has not been an exception.
As the crisis continues to evolve, organisations are struggling with the multi-dimensional set of risks.
While the safety and well-being of workers affected remains a primary priority, companies have also been forced to triage other essentials, such as optimising risk management to ensure organisational resilience in crisis; leveraging implementation of Business Continuity Plans (BCPs) to counter disruption and redefining role of risk professionals – to fortify organisations against similar future occurrences.
Because of Covid-19, stock markets have declined sharply and volatility has increased.
For many assets and liabilities, fair values may have changed significantly, reflecting shift in cash flow forecasts, greater uncertainty and elevated risks.
With regard to pension and retirement savings, the pandemic has set the stage for a crisis in the country, owing to the fact that most Kenyans are now hard-pressed to meet daily expenses.
As a key player in Kenya’s pension sector, the CPF Group put in place a robust enterprise risk management framework that incorporates a Business Continuity Management System (BCMS).
The BCMS is managed by a Crisis Management Committee (CMC) that has been proactive in mitigating the pandemic.
Several actions were taken once the risk level was heightened including holding weekly CMC meetings; lockdown testing drills; equipping staff to work remotely; revision of essential staff list and reduction in office premises attendance; and revision of budgets as a cost-containment measure, among others.
By the time the pandemic had hit a fever pitch, CPF was resilient enough to manage without need r radical scale down of staff or operational components.
Importantly, the BCMS was regularly tested over the years to keep it functional in the event of an actual incidence, now presented by Covid-19.
As the old adage goes, ‘No Man is an island’. It is during crisis that like minds should come together.
Leaders of risk in financial services in Kenya usually congregate via a WhatsApp forum and regular webinars to share ideas onn managing the pandemic.
This group was an eye opener as leaders brainstormed on issues implemented successfully in different organisations.
It is advisable for professionals to brainstorm over current problems in the industry because in sharing, firms can build their resilience better.
BCPs are designed for shorter-term disruptions, and as such, most practitioners have been forced to relook theirs in light of Covid-19.
Even so, companies with BCPs were better prepared to deal with the pandemic than those without.
BCPs should not just be neat policies to show off to stakeholders on demand, but they should be regularly and rigorously tested to establish their efficacy.
Acceptance of the BCP by top leadership ensures adequate resourcing and increases probability of success.
Moving forward, it is unlikely we shall see things the same way. In fact, I foresee a future where employee contracts will be output-based as opposed to being based on a retainer salary.
Employees will have much more flexibility to work in diverse ways including offering skills to multiple organisations at the same time.
More people are likely to move from city life to serene environments that are affordable, less stressful and healthier.
The education system is likely to change radically to suit market demands of people who need to think outside the box.
Any organization that does not adapt will ‘die’.
This has been a critical season for risk profession as firms looked to them to help steer and navigate through Covid-19.
Risk leaders are expected to be proactive in enabling organisations identify future risks.
They shall be expected to remain key advisors to their boards and senior Management teams, thus will need to keep abreast with current information and changes in public policies.
They are expected to raise red flags on anything that could go wrong so it can be nipped on time.
The survival of most organisations may rest on the role of risk leaders during this volatile season. — The author is the CPF Group Head of Risk and Compliance