liaison - risk forum africa newsletter

8/12/2019 LIAISON - Risk Forum Africa Newsletter

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EDITION 1/2014

Five Ps of Risk Managementin the Kenyan Context

Inside:

Specific Risks:

1. Devolution Risk

2. Food Security Risk

3. Food Safety Risk

4. Risks caused bythe InequalityGap andUnemployment

5. Informationechnology Risk

6. Disaster RecoveryManagement

7. Mergers andAcquisitions Risk

8. Strategy ExecutionRisk

9. errorism

he inaugural Liaison Risk Management

Forum was held on hursday 6 th

February 2014. We intend to hold these

orums quarterly, in order to provide a platorm

where challenges emanating rom the risks that

ace our country can be shared, and solutions

and risk management options can be explored.

Why the ocus on risk? Risk is a pertinent issue

not just because o the dynamic, ever changing

nature o the world we live in, but also because

the current decade has seen Enterprise Risk

Management (ERM) emerge as a key issue in

management theory.

Discussions at this first orum were ably led by

five panellists, and moderated by Larry Madowo.

Te panellists were Dr. Wahome Gakuru, Apex

Consulting, (Public Policy expert); John Kariuki,

Assistant Director Vision 2030, (Economist);

Dr. Caesar Mwangi (ormer CEO o Sasini and

Agribusiness expert); James Mworia, CEO,

Centum Investment Group (Investment and

Finance expert); Mr. Baiju Shah Director, 3

Mice (I Expert). Five themes emerged rom

the dialogue which we have dubbed the 5 Ps o

Risk Management in the Kenyan context. Tese

five themes are:-

People: People are a key actor in risk

management because they are responsible or

both the existence and effective management

or risk. Why do some businesses bounce back

aster than others afer a disaster? Good leaders

that plan ahead and put in place effective disaster

plans/emergency response plans. Additionally,

personnel that are ully sensitized or effective

response can also make a difference.

Planning:Planning is critical. Tis calls or us toadopt a pro-active stance. At present, passivity

is all too common in Kenya, and as a result,

management by crisis has become the norm.

Tis trend is costly and sub-optimal solutions

are the inevitable consequence.

Risk Forum Africa is published quarterly by Liaison Risk and Pension Consultants.

The newsletter captures dialogue at the quarterly Liaison Risk Management Forums. Copyright Liaison Risk and Pension Consultants, 2014.

Risk is a pertinent

issue not just

because of the

dynamic, everchanging nature of

the world we live

in, but also because

the current decade

has seen Enterprise

Risk Management

(ERM) emerge

as a key issue inmanagement theory.

Tom Mulwa addressing the forum.

by Tom Mulwa

Cont. on page 2 col. 1


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Devolution Risk: One challenge acing

devolution is what could be perceived as a

fiedom mentality amongst County Governors.

Tis mentality maniests in lack o accountability,

coupled with wastage o public resources.

A second challenge is a potentially bloated

workorce.

Solution:

Te Kenya Anti-Corruption Commissionshould set up offices in the Counties.Tere is a need to be proactive and notwait until grand corruption at County

level is unveiled. Vision 2030 Committees should be

established at County Government level. Leaders who perpetrate corruption must

be dealt with decisively. Kenya shouldemulate Singapore and Ghana in thisregard, where the war against corruptionwas led by the Head of State.

Food Security Risk:Whereas it is well known

that Kenya experiences drought within a five year

cycle, the response to these droughts has been

repeatedly ineffective. Te long term effect o this

continued, inadequate response to droughts in

a country where the majority derive their living

rom rain-ed agriculture, is systemic poverty.

Solutions:

First and foremost, Kenya must put

in place a comprehensive, pro-active,coherent, food security plan. Te biggestsource of risk in the agricultural sector isthe absence of a plan.

Livestock and crop insurance should bemore accessible. A National AgriculturalInsurance Policy is currently in theprocess of being developed.

Enhance use of irrigation. Delays inthe implementation of various nationalirrigation schemes must be addressed.

rees should be planted in order toreclaim and increase forest cover,particularly in catchment areas. Weneed to return to the days when the treeplanting agenda took centre stage. Everyindividual and every corporate can andshould plant trees.

Farmers should engage in value-additionwhere possible, as this will enable themto earn higher margins overall. Highermargins are in themselves a risk mitigant

for those whose livelihoods depend onagriculture.

Use of drought resistant varieties. Use of high yielding varieties Kenya

should follow Israels example here.

Specifc Risks: Challenges and Solutions

A range of risks were discussed during the forum. Thehighlights of the discussions were as follows:

Perspective:Risk management

requires a long term view.

We must let go o short term

thinking, as it will only lead

to stop-gap measures and

temporary solutions. Te right

perspective is gained through

disciplined planning.

Paradigm: A new paradigm

is required among national

leadership and public sector

employees. Dr. Caesar Mwangi

pointed out that the public

sector seems to be dominated

by those with a My urn to

Eat (ME) mentality and

that a shif to a My urn to

Serve (MS) mentality

is long overdue. (Te ME

paradigm is, incidentally,

linked to short term thinking).

Personal Leadership: Every

Kenyan needs to recognise

that real change can and must

start with me. Kenyans are

becoming more and more

individualistic, yet i we are to

arrive at lasting solutions, we

need to be nationalistic. We

need to make the sacriices

necessary or real change to

take place in this country

and reuse to make decisions

which initially appear to be

convenient but, which, in the

end, compromise the national

good.

I would like to express my

appreciation to all who

attended the inaugural

orum and in particular to

our distinguished panellists

or ensuring that tangible,

practical solutions emerged

out o the dialogue. My sincere

thanks as well to KEPSA or

their support. We look orward

to another successul orum in

April.

Tom Mulwa is the Managing

Director, Liaison Risk and

Pension Consultants Ltd.

Dr. Wahome Gakuru and John Kariuki during the panel discussion.

Dr Ndegwa of KEPSA giving a token

of appreciation to Dr. Gakuru.

... from page 1

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Food Safety Risk:Even in countries that

are ood secure, significant damage can

be done by unsae ood or contaminated

beverages. Kenyans know all too well the

great harm, including death, brought about

by this very risk.

Solution:

he Forum was attended by arepresentative of the National FoodSafety Association. Te associationis advocating for the developmentof a National Food Safety Policy.

Risks caused by the Inequality Gap

and Unemployment:Te rising number

o desperately poor people is a grave

concern, and a source o significant risk

to the stability o this nation. Systemic

unemployment leads to hopelessnessand makes people engage in crime and/

or become vulnerable to recruitment by

terrorist groups.

Solutions:

Kenya faces a crisis of skills,not a crisis of opportunities foremployment, (Dr.Gakuru).his calls for restructuring oureducation system so that it can

address the mis-match between theskills required by employers andthe skills/knowledge possessed bythe average university/high schoolgraduate.

Where businessesare well managedand ach i evea p p r e c i a b l eg rowth , theprivate sector canhelp solve theunemployment

problem. JamesMworia sharedhow Centumsemployee base hasgrown five-fold inrecent years, as aresult of businessgrowth.

I n f o r m a t i o n

T ech nology Risk :

Banks continue tolose substantial sums

on account o raud.

Te shif to online and

mobile banking has

resulted in increased risk

exposure. Tis stems rom the rapid speed

with which transactions are executed and

the act that bank customers can now

interact directly with the banks I systems

on a 24 hour basis. Additionally, the ast

pace o technological change means thatsystems rapidly become obsolete, yet by

their very nature, these systems cannot be

overhauled/upgraded overnight.

Solution: Continuous

reviews o systems to

detect and address

vulnerabilities.

Disaster Recovery

Management:Tis is an

observed area o neglect

in many organisations in

Kenya. Kenya does not

have enough intelligent

data centres.

Solution: An eective

r i s k m a n a g e m e n t

solution starts by

mapping the disasters

that are likely to affect

an organisation. Once

the plan is in place,

it must thereater be

continuously reviewed

to ensure it remains

relevant.

M e r g e r s a n d

Acquisit ions Risk:

Statistics show that mergers/acquisitions

do not always deliver the value expected.

Solution:Te critical thing beyond the

numbers is to understand the people who

make the numbers happen.What are their

values? How committed are they to the

organisation and its strategy? Investors

must recognise that culture aects an

individuals work-ethic. It pays to take time

to induct, orient and acclimatize the staff

o the acquired entity to the ethos o the

new owner. Secondments to the holding

company can be useul in this regard.

Strategy Execution Risk: he biggest

determinant o effective strategy execution

is people, because systems and processesinteract with people.

Solution: An engaged, motivated, pro-

active team that takes ownership or

delivering results against the strategy.

Terrorism:With the Westgate attack still

resh in our memories, it is clear that the

risk o terror is real and affects us all.

Solution: A collective, collaborative

approach is required. Every citizen shouldown the security problem i Kenya is to

significantly reduce its vulnerability to this

threat. More vigilance at grassroots level,

and between communities, is required.

The rising number

of desperately

poor people is a

grave concern,

and a source of

signifcant risk tothe stability of this

nation. Systemic

unemployment leads

to hopelessness

and makes people

engage in crime

and/or become

vulnerable to

recruitment by

terrorist groups.

Dr. Caesar Mwangi, James Mworia and Baiju Shah.

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Secure Business LifeNAIROBI KAMPALA DAR-ES-SALAAM MOMBASA KIGALI JUBA

www.liaisongroup.net

Tel:

Fax:

Liaison Group Consulting,Liaison House, State House Avenue.P.O.Box 58013 - 00200 Nairobi, Kenya.

+254 020 271 0181 +254 020 271 0570/1+254 724 253 550 +254 735 330 669

+254 020 271 0137

Since 1981 Liaison has been at

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consulting in Africa.

Through a comprehensive suite

of service offerings, Liaison is

wholly and exclusively engaged

in supporting its clients in

building and maintaining robust

risk management and internal

control structures. The value

we create is driven through by

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