HEADLINE: Risk managers say political risks top list of concerns for 2015
By Billie McTernan & Liz Booth
[Lagos & London] Risk managers across Africa are increasingly concerned by growing political risks across the sub Saharan region.
Commercial Risk Africa has been asking risk managers across the region for their views on a range of risks. Political risks appear to have remained at the top of their list of concerns with less than 10 percent of those responding saying the risk has not changed in the past year or has decreased.
Political risks embrace a number of areas, including the risk of politically motivated violence and riots, foreign exchange rates, sanctions and regulatory risks.
However, risk managers say uncertainty caused by forthcoming elections or the risk of governmental change is the main cause for concern. Uncertainty is impacting the willingness of foreign investors to commit to certain countries.
Political risk also includes the risk of corruption, with risk managers in Nigeria, Kenya and South Africa all citing corruption as an ongoing risk to their businesses. Not only is it impacting the daily operations but also the appetite of investors. In South Africa Terry Booysen, Executive Director, CGF Research Institute, put political uncertainty and instability at the top of his list of risks, while Nico Snyman, CEO of Crest Advisory Africa, stressed that the problem starts at the top.
In Kenya, Agnes Mbaire, responsible for Internal Audit, Risk Management and Compliance at Postbank, said fraud risk remains a major challenge for risk managers operating in Kenya, with Joan Kirika, Head of Risk Management at the Insurance Regulatory Authority, adding that it remains a culture problem.
Gilbert Mwalili, Risk Manager at Protecht, also put political risks at the top of his concerns. “In business people are very quickly affected by political instability. People will react in different ways. One organisation may see it as a zero risk while others see it as a major risk.
“The problem is that political risk is so broad.”
Peter Mulwa Kioko, Risk Manager at East African Breweries, added “Political dynamics can change so quickly and it is that unpredictability that causes the risk. It can create uncertainty around regulation or the fiscal framework.
In Nigeria, risk managers admit to nervousness around the impending elections. Adebayo Adebeshin, Risk Manager at MTN Nigeria, saw political agitations and terrorism as one of his top three concerns and fears political risks are rising fast in the country.
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