There are indications that businesses and other institutions may face emerging risks that may threaten the nation’s economy in the next five years.
Experts gave the projections yesterday, at the Risk Management Association of Nigeria (RIMAN) Risk Management Outlook 2022, themed: “Managing emerging risks efficiently and effectively, need to become more resilient” held virtually.
The Deputy Leader, Americas Financial Services Consulting Centre for Board Matters, Mark Watson, who spoke on “The use of digital technology to improve risk functions, key focus on cybersecurity controls,” stated that businesses are likely to face risk in data privacy, climate change, cybersecurity, regulatory capital management, finances, liquidity, market and industry disruption due to new technologies, the integrity of data/data destruction and resurgence of another pandemic, among others, in the next five years.
He said these risks are capable of causing businesses to crumble, thereby affecting the economy of a nation. Watson said institutions need to re-prioritise their business models for digital transformation, especially as budget and scale of change are the biggest risk in becoming resilient.
President of RIMAN and Chief Risk Officer of Bank of Industry (BoI), Ezekiel Oseni, said the cyber threat is becoming a huge concern for Nigeria, especially for businesses and organisations that depend on Information Technology (IT).
Oseni pointed at phishing activity, saying hackers get access to sensitive information of institutions especially as organisations have their staff work remotely.
He advised that organisations should be suspicious of certain emails and information on their platforms, while installing antimalware, antivirus, spam filters and firewall software to avoid phishing.
He also advised institutions to limit the data access their staff have, noting that storage devices should be deactivated to address cybercrime and its effect on the economy.
Oseni also identified monetary policies as a risk management factor, noting that foreign exchange instability has become one of the challenges for businesses.
He said every sector should be concerned about risk management and how much opportunity there is to harness for businesses to thrive in the economy.
Director, Climate Change and Sustainability, EY West Africa, Eunice Sampson, said the rising environmental and social risks are often not taken as a great concern by institutions in Nigeria.
She said environmental risks, such as depleting conditions of the ozone layers, gradual reduction of water quality, deforestation and rising sea levels are some of the new risks in the Environment, Social and Governance (ESG) risks.
She said if businesses and institutions don’t pay attention to these risks, it could lead to major catastrophe in the economy, noting that environmental and social risk management are issues that require immediate corrective actions.
Sampson said this is why EY West Africa is ensuring that businesses take responsibility for these risks and help them come up with plans to mitigate the risks in their internal operations.
The First Vice President and Executive Director, Risk Management/Chief Risk Officer, Fidelity Bank Plc, Kevin Ugwuoke, said financial resilience is a very important consideration as the world is moving at a fast pace with changes coming suddenly.
He said the ability to respond to these risks and changes determine the measures corporate entities can take to strengthen their financial resilience.
He said institutions should have KPIs and scan their environment, noting that while a lot goes on around, response to changes is vital.
Ugwuoke noted that fintech has leveraged technology to bring positive changes to environmental risks, as they have come up with strategies to respond to them.
He urged institutions and businesses to look internally at their resources and capabilities and how it changes, noting that these are the tools to react to environmental changes and risks.
The Director, EY, Financial Services Management, Abiodun Ogunoike, said banks are taking liquidity risk more seriously, as they are increasing capital and taking proactive steps with periodic review.
He said institutions are leveraging technological transformation to become more resilient in the economy.
