Africa 2020 risk outlook

Published: Tuesday, 14 January 2020 08:57

Based on their experience during 2019 and their informed reading of the coming year, the members of ContinuitySA’s executive committee have identified the following risks as particularly relevant to the Africa region in 2020...

Cyber risk

As organizations and businesses continue to digitalise, cyber risk grows. The Business Continuity Institute’s (BCI) Horizon Scan Report 2019 put cyber attack as the fourth most prevalent source of disruption in the previous 12 months, and predicted it would become number one in the next 12 months. NTT, the Japanese IT and telecommunications company that owns Dimension Data, suggests organizations should pay due attention to the basics of cyber security, ensuring they have the right people, processes and tools in place. At the same time, though, they must collaborate to stay ahead of the trends and adopt innovative strategies where appropriate.

A key, and often unrecognised, element of cyber risk is the increasing use of cloud. Organizations must be aware that cloud providers’ data centres / centers can also go down, and build that risk into their business continuity plans.

Utility risk

The resumption of load-shedding by Eskom, the erratic nature of the load-shedding and the spectre of Stage 6 and even Stage 8 load-shedding, are setting off alarm bells. In addition, a water crisis in the near future is highly probable too. Driven by prolonged drought in certain areas of the region, extremely poor reticulation infrastructure and an increase in population in metropolitan areas, water outages and rationing, as previously experienced in the Western Cape, are highly likely. Some figures indicate that up to 30 percent of municipal water supplies are lost to leaks, while there are ongoing concerns about the maintenance of key hydro-electric and water storage facilities like Kariba and Cahora Bassa. Water and power outages will thus be key focuses of business continuity plans.

The impact of persistent and devastating power outages in both Nigeria and Zimbabwe demonstrate the extent to which unstable utilities can hamstring economies.

A further cause for concern is the way a wage strike — hardly an unusual event in South Africa — was enough to compromise South African Airways’ precarious finances and take it into business rescue; Eskom is in a similarly fragile financial position.

As telecommunications are severely affected by power outages, we can expect the risk of telecoms outages to be high on the agenda. Many of these towers also transmit the telemetrics for water pumping and other systems that support everyday life, so the impact of their going down is substantial.

Supply chain risk

The global nature of business means that companies participate in long and complex supply chains; risk exposures thus affect the entire chain. When doing their business impact analyses, organizations need to give thought to the contingent risks they face thanks to their participation in supply chains.

Geopolitical and socioeconomic risks

Brexit and the high-stakes US-China trade negotiations remain key concerns. However, each region has its own risk profile, which needs to be properly understood. This is particularly true of Africa, where the risk profile varies quite significantly from country to country. Locally, the perceived inability of the government to take the necessary action to restore the economy to growth and create jobs remains a key risk driver.

Socioeconomic risks have been concerning South African businesses for decades, and the continued decline in growth prospects and poor job prospects will continue to be worrying.

Labour and skills risks

Lack of skills has been a consistent problem, and the advent of the fourth industrial revolution exacerbates the issue. A particular challenge is the shortage of cyber security skills, which clearly feeds into the cyber risk issue noted above.

Paradoxically, the shortage of jobs seems to have made the industrial relations environment even more volatile. The risk of protracted and even violent industrial action remains high, and its impact on an already fragile economy, as the example of South African Airways shows, can be profound.

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