Â Risk management knowledge and skillsÂ areÂ vitalÂ tools for organisations wanting toÂ navigate the complexÂ world ofÂ uncertainties, writeÂ Obinna ChimaÂ andÂ Nume Ekeghe
In order to cope with the challengesÂ of creating consistent and workable processes for managingÂ their businesses,Â organisations need toÂ ensure that they embrace the principles ofÂ risk managementÂ at all levels.
In fact, experts have stressed the need forÂ managementÂ and staff of organisations to always weigh theeffectsÂ of uncertainties on their objectivesÂ when making decisions.
In Nigeria, since the last banking crisis that saw the intervention of the banking sector regulators in some of the financial institutions, a lot of them have continued to take measures that would ensure that they remain sound, especially with an increasing number of the banks focusing on growing risk management culture. But beyond the banks, experts have stressed the need for operators in other sectors such as manufacturing, oil and gas, among others to also imbibe effective risk management culture.
They made this call at a â€œFundamentals of Risk Management Training (FoRM),â€ that was organised by the Risk Management Consulting Limited (RMCIR),Â in partnership with theÂ UK Institute of Risk Management, that took place in Lagos recently.
To theÂ Managing Partner, RMCIR, Mr. Robert Mbonu,Â the importance and priority attached to risk management are due to its direct linkage with organisation or business objectives.
He pointed out thatÂ every organisation has objectives, just as he noted that risks are the effect of uncertainties onÂ suchÂ objectives.
Mbonu explained: â€œThis effect could be positive or negative or a combination of both depending on the circumstances.
â€œTherefore, a sound understanding, and knowledge of risk management, presents users with the tools and skills to manage these uncertainties in a structured way.
â€œThis managementÂ science has become a competitive advantage used by well managed businesses to lead and outperform peers in any industry.
â€œRiskÂ management maturity in an organisationÂ speaks to how well it is embedded in the culture, and decision-making process.
â€œFor its successful implementation, there must be buy-in atÂ board level, and it must be driven from the top.â€
On his part, the facilitator at the training,Â Mr. Joachim Adenusi,Â who is aÂ Fellow andÂ former Director of the IRM UK, noted that individuals and organisations wereÂ becoming more aware of the benefits and importanceÂ of risk management.
â€œTo take it back a bit, risk management started from where the auditors or the chief financial officer would be concerned about fraud or internal control and so they would set up an audit team to investigate and control things.
â€œBut with time, you would find out that the essence of risk management is not to control things but the reason you manage risk is to enable things to happen.
â€œSo, you set out your goal as a business, you have a vision to achieve and if in a few months the vision dies and the business dies. Repeatedly, what happens in Nigeria is that most of the businesses are not sustainable and the reason why they are not sustainable is that sometimes people donâ€™t understand the terrain, contest and the risk and the issues.
â€œSo, businesses are beginning to think that they need to understand the issues ahead of time and then are able to put some measures in place or actions to prevent or create backup plan then maybe the business would stand a test of time.
â€œSo, it is about survival. In an environment where it is harsh itself, where you canâ€™t get loans easily or infrastructure is available, or the government is backing you. So, most business people are also looking to do something for themselves. Also,Â in Nigeria, we have seen collapse of financial servicesÂ companiesÂ so many times and the regulator is nowÂ saying this cannot happen again. So, in order for that not to happen, we need to bring this skill in.â€
Adenusi, who is the chief executive of Conrad Clark, pointed out that presently,Â financial services and businesses are waking upÂ to the importance of risk management, just as he pointed out that there was need to also enforce risk management in the public sector.
â€œIÂ think the next phase we are going to get to, isÂ a point where the government would wake up to say we need risk managementÂ in government institutionsalso. And when we start getting to that place, you would start seeing human lives being protected, capital being protected, hazards being protected, opportunities being enhanced and innovations.
â€œSo, what the government should be thinking of is,Â ifÂ theyÂ are making promises to the electorate and to the citizens that they are going to build schools, houses, etc,Â proactively,Â they should also be thinking ofÂ whatÂ theyneed to put in place to ensure that those promisesÂ theyÂ are makingÂ are realisedâ€, he stressed.
He further added: â€œRisk management would become a vital stool and one of the skill set that would help the government to deliver promises and objectives and the more they deliver on their promises, their backing would get stronger because the public would always react to performance.
Â â€œSo, the government should start thinking about adding these skills to other skills they have. So that they help them to proactively prepare not reacting and it would help to foresee threats and opportunities.â€
Enterprise Risk Management
Also commenting on the importance of Enterprise Risk Management, Mbonu noted that every organisation is faced with different kinds or risk.Â These come under various headings depending on the area of the business affected, such as market, regulatory, operational, cyber to mention a few.
â€œWhile each of these risks can be monitored independently, this mode is considered suboptimal and is referred to as dealing with the risk issues in silos.
â€œEnterprise risk management therefore over rides the silo tendency of managing risks.
â€œIt is the act of dealing with the entire universe of risks and managing same in a holistic manner under a carefully designed framework.Â By so doing, all the bases are covered, thereby providingÂ assurance to the business owners that every foreseeable uncertain angle is covered.Â This is the way to go,â€ he said.
Clearly, every organisation is in business to make profit, and by so doing, add value to its stakeholders. Adding value can only be achieved if strategic objectives are met.
Therefore, to guarantee thatÂ such strategic objectives are met, staff must be equipped with the knowledge and skills of knowing how to identify assess and prioritise the various risks or traps that stand in the way.Â This takes a measure of learning.
The skills must be ingrained in the operators and drivers of the organisation to the level that it becomes a culture.
The UK-based IRM is aÂ global leader in the risk profession through education and lifelong learning.
â€œRMCIR,Â working in conjunction with the UK IRM, made it possible to train operators and boards locally in Nigeria, thereby saving delegates the cost of traveling to the UK.
â€œThis gives Nigerian operators the opportunity to learn about ERM at a rate that is cheaper and more affordable.
â€œThe Fundamentals of Risk Management courseÂ was designed to equip participants with the skills, knowledge and tools to embrace opportunities, and navigate the risks and obstacles that exist in every enterprise.
â€œThe tools and methods learned in a practical easy to understand format, will hone the skills of participants, and that of teams to spend more time chasing the things that matter most for the organisation.
â€œWhile at the same time being on the watchout for those risks that can prevent objectives from being met,Â this course can be customised and made bespoke for in-house delivery,â€Mbonu said.
Apart from the knowledge gained,Â the RMCIRÂ boss saidÂ participants will benefitÂ from it by having a globally recognised certificateÂ of attendance issued byÂ the IRM UK; automatic affiliateÂ membership of the Institute, with access to a plethora of online risk managementÂ resources;Â join a global network ofÂ risk practitioners, among others.
Â To theÂ Director of Programme IRM, Mrs. Laide Abel,Â the training was organised in order to strengthen capacity in the area of EnterpriseÂ RiskManagement.
â€œTo a lot of people,Â Enterprise Risk ManagementÂ is still like a black box and they think it is a mysterious thing that only certain people who are the risk officers can understand.
â€œBut we realise that risk is something you deal with everyday, so we thought we should bring to the level where everyone can understand what risk is all about,Â and they can understand how to manage it and how to maximise the opportunities that they come across in their careers and in the personal lives.
â€œThis isÂ aÂ programme that everybody should attend whether you are in employment or you have your own business It is programme that everyone should attend. And the great thing about this particular program and what sets it apart from other risk management programs is that it is from theÂ IRM, whichÂ is one of the globally acclaimed risk management institutes.
â€œSo, we decided that we wanted to bringÂ theÂ quality of an international training here to Nigeria,Â so that people would be able to afford same quality of training without having to spend aÂ lotÂ to travelÂ to the UK,â€ Abel said.