Kathy Gibson is at the Deloitte Risk Conference in Sandton – Businesses face a wide range of external risks and leaders must not only be aware of them, but ensure there are processes in place to mitigate them.

That is the word from Kuseni Dlamini, chairman of Massmart Holdings, addressing the Deloitte Risk Conference.

He points out that there are five overarching risks that businesses face today.

The first and possibly most relevant is technology risk, led by cyber-risk and cyber-security.

“Cyber- security is something that businesses are battling with,” Dlamini says. “They are battling to even quantify it, and yet it is the single biggest risk they face. According to the World Economic Forum the cost of cyber-security last year was $1-trillion.”

He adds that people are key to security, and leadership has to come to the party, with the right mix of competencies and skills in the boardroom, able to deal with the risks.

Equally important when it comes to technology risk is the issue of data fraud and data theft, Dlamini adds.

“We have had some very high-profile cases, so it’s important for organisation to understand what information is critical, how to protect it, and ensuring we have the resources to do so.

“Too often, these issues are delegated to the IT department. But those days are gone now: as we get more entrenched in the digital space, and enter the world of robotics, big data and intelligence – this comes with risk, and we have to be able to manage it.”

The issue of Industry 4.0 is a further technology risk. “As we get more entrenched in digitising our businesses, we also get more exposed. It is an opportunity, but it is a risk as well.

“In the short-term, as we transition, there is a risk, there are workers not equipped to be meaningful players in the fourth industrial revolution.”
Government needs to get involved in helping to transition the workforce, and education should also change to meet the current challenges, Dlamini says.

“There is a need for us to reframe ourselves, and our approach to skills development, in a way that lets us position our sons and daughters to be part of the future workplace.”

The final element of technology risk is the risk of collapse when it comes to crucial infrastructure.

“We are more and more dependant on digital platforms, and that dependency makes us vulnerable,” Dlamini says. “Hackers only need to win once; and we have seen the effects.”

Economic risks loom large in companies’ sights. “Global trade wars have a huge impact on our economy,” Dlamini points out.

Currently, this is mostly felt in the iron and steel industries, but automobile manufacturing could find itself under fire as well, he says.

The second economic issue is the global financial crisis. “It was 10 years ago that Lehman Borthers collapsed and released a global financial frenzy. We were very lucky that we prevented a global collapse that time.”

The question now he says, is whether we can predict and prevent another collapse. “There may well be another crisis to come.”

A fiscal crisis is looming, Dlamini adds, epitomised by the potential Italian collapse, which may have a spill-over effect.

“We also have our own fiscal challenges in South Africa. We had the minibudget last year and have seen the response from the global market.

“These things impact on our ability to add value and cannot be ignored.”

The issue of unemployment and under-employment could become a global crisis as industry 4.0 gathers pace, Dlamini adds.

“As we see the advance of the fourth industrial revolution it is inevitable that jobs are being lost, regardless of your positon or industry space. How will you ensure your relevance? We are all being forced to re-invent ourselves.”

The third category of risk – geo-political – are characterised by global terrorism, Dlamini points out.

“Governments are having to fight wars without visible enemies. We need a new breed of diplomats that can deal in the space of asymmetric wars. It is becoming very complex and impacts all areas of our lives.”

He adds that relationships across the globe are tense and tenuous.

“We also face the issue of state collapse, which exacerbates the risks and challenges that the world faces from a security point of view.”

Multi-lateralism is a victim of the geo-political risk, and affects our ability to co-ordinate in the event of other risks coming to the fore.

Geo-politics is also seeing the collapse of national governments, where governments cannot preside over their own state of economies. A case in point is Zimbabwe, while the Democratic Repiiblic of Congo demonstrates a different type of government collapse.

Whatever happens in other states affects us, Dlamini points out.

The fourth category of risk is societal risk. “We are seeing this upsurge in involuntary large-scale migration that is shaping global affairs.

“This is giving rise to xenophobia, and we need to revisit our values as humanity: is it right to deny access to people who need help?”

Linked to that is the profound social instabilities in many countries – there are probably 20 protests happening at any time just in South Africa.

“This also increases business risk – you need stability to run a viable business.”

Food scarcity is another risk, with billions of people going to bed hungry – despite the fact that there is more than enough food available.

A water crisis also looms large, Dlamini says. “We need to look at how we can share the global water resources we have across all countries and all communities. This requires a shared view of the future, and a global sense of solidarity.”

The final category of risk is environmental risk facing the world – and becoming more pronounced.

“The top of that is climate change, and the risk of failure of mechanisms to prevent it.”

The countries that are victims of climate change are those least responsible for it, Dlamini adds, with Africa a case in point.

“This is an issue the world should not be divided on; it is an opportunity for us to be united.”

Extreme weather is related to climate change, affecting people around the world. “These are real risks, and we need to be able to gear ourselves, get the right mechanisms in place, to respond effectively, and mitigate the impact on the most vulnerable.”

Man-made disasters are real, and we need to take care of our carbon footprint, Dlamini points out.