By Henry Uche, mercy4henryuc@gmail.com
It is not in dispute that unforeseen events can cause anxiety, however, robust preparation significantly enhances crisis response.
Global disruptions affect individuals as recent events, including the Russia-Ukraine war, the Israel-Hamas conflict in Gaza, and the escalating tensions between Israel and Iran, underscore the need for proactive risk management strategies.
The Risk Managers Society of Nigeria (RIMSON) recently convened its 2024 annual risk management conference in Lagos. The conference, which included participation from insurance professionals, security experts, conflict resolution consultants, and public affairs specialists, emphasized the crucial role of risk managers and strategists in public administration and governance.
Conference attendees stressed the importance of risk management for effective leadership, asserting that no nation or state can flourish without well-defined risk management strategies. They posit that competent leaders proactively integrate Enterprise Risk Management (ERM) principles into their corporate plans, strategies, policy development, and decision-making processes.
They also maintained that, for them, nothing is new because they envisage, think of the unimaginable and see things differently and most times, what they see may appear nonsensical to others, but when the unusual happens, they (risk managers) heave a sigh of relief, while those who relegated them licks their wounds.
With the Theme: “Global Economic Disruptions – Opportunities & Challenges for National Resurgence,” analysts believe that disruptions have had positive impact. This, they say is evident in some developed economies whose geniuses have deployed their ingenuity to innovate and create many new things for the global market. With global reports about Nigerians who are doing great exploits in different parts of the world, RIMSON believed that Nigeria can take advantage of global shocks to create things that would make way for the resurgence of Nigerian economy and by extension, other parts of the world, just as China, the United States and others are doing.
Need to create office of Chief Risk Officer of the Federation
In his address at the conference, the president of the governing board of RIMSON, Mr. Gus Wiggle, again called for the establishment of Office of the Chief Risk Officer of the Federation, saying “It is long overdue”.
Wiggle who was the former Chairman of Nigerian Insurers Association (NIA), and Principal Consultant at Carefirst Consult, had at many fora, made this call as an insurance and risk management professional.
He said he wants to see that the impact of risk is mitigated if not avoided and reduced to the barest minimum. For instance, incidents like building collapse, accidents, socioeconomic and political crises in the country are topical issues to worry about.
“Risk management professionals have the capacity to analyse the existing and emerging economic disruptions both from global and local perspective and also identify the numerous overlooked inherent oppourtunities for individuals, businesses and most especially for Nigeria as we forge ahead for the much needed economic resurgence,” he said.
According to him, the 2023 general elections, currency redesign and security challenges in the country should teach Nigerians lessons and make everyone (with the help of risk managers) to prepare against the days of uncertainties. Notably, the lack of full integration and implementation of risk management at the federal and state budgeting, planning and governance calls for national outcry.
“The various policy somersaults further confirm the lack of risk management in the development of various policies. This has led to recurrence of avoidable economic and loss of lives. RIMSON is still amplifying the call for risk management integration and implementation in every strategic planning, decision and policy design centre,” he said.
He affirmed that the Society would still unrelentingly pursue its mission of promoting risk management awareness, education and culture, until it is understood by every Nigerian.
“As a Society, we strongly advocate for integration of risk management into all sectors of the economy. We reiterate our call for the creation of an Office of the Chief Risk Officer of the Federation coordinating with the states and local governments to proactively formulate strategies for mitigating all risks. This will end risks affecting the nation being treated in silos but addressed as a whole,” he said.
He advised government across board to heed to effective and sustainable strategies proffered by the risk managers to address the increasing global uncertainties and hostile business operating environment and emerging challenges.
“Our recommendations highlight the available risk transfer options that will ensure business growth, business continuity and economic resilience regardless of the emerging global economic disruptions,” he said.
While charging 40 members of the Society who were inducted into associate and fellow cadre, to fortify themselves for the tasks ahead, Wiggle explained that the role of risk managers is not only taxing but complex and technical, hence they must roll up their sleeves and set out on time if they must make impact.
“As risk professionals, we provide the roadmap for the nation’s current economic and security challenges, towards achieving a national economic resurgence that will reposition Nigeria to her frontline position in the comity of nations in the continent and globally,” he said.
Benefits of risk management integration, implementation
To the risk analyst, sound risk management enhances Nigeria’s national security, healthcare, economy and prosperity, equipping the citizens to maximise oppourtunities inherent in the emerging risks.
“We look forward to greater risk management advocacy cutting across every arm of governance, all geopolitical zones and sectors of the economy through greater collaboration with relevant stakeholders.
“We look forward to the development of the much-needed manpower in the field of risk kmanagement through the Society’s training arm – The Center for Risk Management Development (CRMD). We look forward to amplifying the risk management message to the grassroots to deepen the Society’s mission of promoting risk management culture in Nigeria.
“We must keep equipping ourselves to face the challenges ahead as risk management professionals for greater effectiveness in discharging our much-needed roles in this age of disruptions. RIMSON will continue to push and contributions for the integration and implementation of risk management into every sector of our national life with the support of all stakeholders for the greater good of our nation,” he said.
Nigerian insurance has the potential to withstand global disruptions
In a lead paper presentation, a Professor of Finance & Capital Market, Uche Uwaleke, while evaluating the readiness of Nigeria’s financial sector for global disruptions, affirmed that the insurance sub- sector in Nigeria among others, has the capacity to withstand global disruptions.
While the banking sector, ICT and others are already grappling with the challenges occasioned by unprecedented disruptions, the Nigerian insurance industry is not expected to lag behind, given the significant feat recorded in the past.
Uwaleke maintained that the improved industry financial performance (the one trillion naira) premium written recorded in Q4 of 2023); the positive stock market returns for quoted insurance companies and the sale of products through alternative distribution channels such as telcos, is proof that the sector under review can soar among others in the financial sector during a critical time.
“Despite the low penetration and other weaknesses, if we take advantage of the vastly untapped markets and selling of compulsory products, improved industry regulation and enhance product offerings with the introduction of micro insurance and Takaful (non interest insurance), the sector will blossom even in the midst of global economic storms,” he said.
The don posited that the Nigerian financial sector appears to have recovered from the global financial crises of 2008, the impact of COVID-19 as well as the supply-chain disruptions occasioned by the Russian Ukraine conflict, however technological advances such as cryptocurrencies, block chain, Artificial Intelligence etc continue to pose a challenge.
He added that forces of global disruptions like globalization, financial crisis, global pandemic, advances in technology among others, would definitely raise their heads, but in order to enhance sector readiness, financial institutions and regulatory bodies need to work together to share information and develop coordinated approaches to global disruptions.
NAICOM throws weight behind RIMSON
As the sole regulator of insurance industry in Nigeria, NAICOM gave a nod and threw weight behind risk Managers at the occasion when it said there is need for effective risks strategy for a stable, resilient and viable economy. In a goodwill message, the Commissioner of Insurance, Mr. Olorundare Sunday Thomas, opined that a conscientious management strategy would be needed to ensure that companies do not cross their risks margin in their quest to increase productivity and profit.
To guard against going beyond risk appetite level, he urged regulators to come up with measures to assess risks appetite of companies and ensure they stay within the prescribed threshold.
“Sector regulators should initiate risk management and corporate governance frameworks to guarantee safe and sound operations of enterprises. Companies’s board have the responsibilities to ensure that their firm have in place effective system of risk management, internal control and functions to address key risk issues they face, as well as the applicable legal and regulatory obligations.”
NAICOM Chief the the Head of Research and Publication at the Commission, Mr. Lucky Fiakpa, admonished companies to ensure that the best human resources occupy strategic places to provide leadership, directions and oversight functions of the business for quality service delivery. “Key persons are needed in risk control functions whose actions may have material impact on the risks exposure to the company.
“There is need for a well designed policy to guard against taking inappropriate or excessive risks, particularly at this critical time. We expect RIMSON to come up with its resolutions on risk management and governance control for macro economic development,” he added.