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  • South Africa Risks 2015First Edition

    IRMSA Risk Report

  • 59%41%Private Sector

    Public Sector

    The Institute of Risk Management South Africa (IRMSA) is the leading source of information and networking opportunities within the Risk Management industry, with members from a wide range of organisations both from the private and public sector. As the Professional Body for Risk Management in South Africa, IRMSA represents individuals and companies committed to the enhancement of the Risk Management discipline. We aim to be the risk management institute of choice for risk professionals and practitioners in Southern Africa, dedicated to the advancement of the risk management profession and accreditation, through research, promotion, education, upliftment, training, guidance and strong relationships with other Institutes and Associations.

    What does IRMSA do? What does the Risk Intelligence Committee do?

    RISK CHATRISK REPORTBLOG

    Who participated?

    53% Black

    33% White

    9% Indian5% Coloured

    58%

    42%

    male

    female

    Participation from industry

    21

    1620

    Total participants Online Surveys

    Risk Lab WorkshopCape Town

    Risk Lab WorkshopJohannesburg

    SurveyIRMSA Conference

    30221775333322211

    Professional Services

    Government and Public Services

    Financial Services

    Energy, Water & Utilities

    Communication & Technology

    Transportation & Logistics

    Petrochemicals

    Manufacturing

    Mining, Engineering & Construction

    Hospitality

    Education

    Other

    Healthcare

    Retail

    1

  • Daily2-3 Times a WeekOnce a Week

    2-3 Times a MonthOnce a MonthLess than Once a Month

    Never

    On what level do you interact with your organisation's risk

    management?

    Interconnectivity Risk Ratings Causal loop Linking to the countrys objectives

    Next milestones for this report

    Top 10 SA risks by likelihood

    Top 10 SA risks by consequence

    Increasing Corruption

    Structurally high unemployment / underemployment

    Failure / shortfall of critical infrastructure

    Profound political and social instability

    Major escalation in organised crime and illicit trade

    Escalation in large-scale cyber attacks

    Severe income disparity

    Mismanaged urbanisation

    Massive incident of data fraud / theft

    CORRUPTION

    UNEMPLOYMENT

    INFRASTRUCTURE

    POLITICAL AND SOCIAL INSTABILITY

    ORGANISED CRIME

    CYBER ATTACKS

    FINANCIAL MECHANISM

    INCOME DISPARITY

    URBANISATION

    DATA FRAUD

    1

    2

    3

    4

    5

    6

    7

    8

    9

    10

    Massive incident of data fraud / theft10

    Increasing Corruption

    Governance failure

    Breakdown of critical information infrustructure & networks

    Failure / shortfall of critical infrustructure

    Fiscal crisis in key economics

    Escalation of economic and resource nationalisation

    Escalation in large scale cyber attacks

    CORRUPTION

    GOVERNANCE FAILURE

    UNEMPLOYMENT

    INFRUSTRUCTURE AND NETWORKS

    CRITICAL INFRUSTRUCTURE

    FISCAL CRISIS

    FINANCIAL MECHANISM

    ECONOMIC AND RESOURCE NATIONALISATION

    CYBER

    INCOME DISPARITY

    Structurally high unemployment / underemployment

    1

    2

    3

    4

    5

    6

    7

    8

    9

    10

    3.6%5.2%

    8.4%

    4.4%

    1.2%

    70.4%

    6.8%

    RISK CHAT

  • ContentsPreface.......................................................................................................................................................................................................5Foreword..................................................................................................................................................................................................6Executive Summary...........................................................................................................................................................................7Introduction........................................................................................................................................................................................10Part 1: South Africa Risks 2015.................................................................................................................................................11

    1.1. Survey Results and WEF Comparison...................................................................................................................111.2. Additional Risks in the South African Context................................................................................................121.3. Further Action.....................................................................................................................................................................15

    Part 2: Analysis of Top Risks: Feedback from Subject Matter Experts...............................................................162.1. Increasing Corruption and a Major Escalation in Organised Crime and Illicit Trade..............162.2. Structurally High Unemployment / Underemployment.........................................................................202.3. Failure / Shortfall of Critical Infrastructure.........................................................................................................232.4. Escalation in Large-scale Cyber-attacks and a Breakdown of Critical Information Infrastructure and Networks.......................................................................................................................................312.5. Failure of a Major Financial Mechanism or Institution...............................................................................342.6. Severe Income Disparity..............................................................................................................................................352.7. Governance Failure..........................................................................................................................................................372.8. Profound Political and Social Instability..............................................................................................................392.9. Fiscal Crisis in Key Economies....................................................................................................................................402.10. Escalation of Economic and Resource Nationalisation..........................................................................422.11. Mismanaged Urbanisation......................................................................................................................................432.12. Massive Incident of Data Fraud / Theft............................................................................................................44

    Part 3: South African Risk Assessment Methodology.................................................................................................46Part 4: Acknowledgements and Project Team...............................................................................................................50

  • 5

    Preface

    One area that we were able to address has been risk intelligence, and we accomplished this by the formation of the IRMSA Risk Intelligence Committee late in 2013. The purpose of this committee is to identify and address the issues pertinent to our members in the Risk Management fraternity. The initial objective of the committee was to present members with expert insight on relevant

    As the Institute of Risk Management South Africa (IRMSA) has evolved over the past eleven years, we have continued to identify the needs of our members and have ensured that, as far as possible, we proactively respond to these needs as well as those of the Risk Management community as a whole.

    Gillian le CordeurChief Executive OfficerInstitute of Risk Management South Africa

    current events. However, the committee soon appreciated that there was a need for a much broader body of work focusing on Risk Management and how it affects South African businesses in particular.

    Every year we reflect on the World Economic Forum Global Risks Report to prepare and inform the programme for our annual Risk Lab in order to address risks facing businesses in South Africa. To complement and enhance this process, the committee saw the need for a similar but more specific report focused on South Africa.

    We therefore present the first annual IRMSA South Africa Risks Report 2015. The report will grow and mature each year and your feedback in support of our objective for continuous improvement will be appreciated.

    I would like to thank our IRMSA Members for their invaluable input, as the content of this report has been driven through membership participation. This project would not have been possible without the contributions made by the IRMSA Executive Committee and our subject matter experts. My appreciation goes to the Risk Intelligence Committee, under the leadership of Christopher Palm, and I am also most grateful to Michael Ferendinos for sharing his time and skills on this project.

    It is our intent that this document be used widely by risk practitioners and business leaders. We also encourage you to share it within your organisation and to use it as input for your decision-making processes in 2015.

    IRMSA Risk Report 2015

  • 6

    Foreword

    As Chairman of the Risk Intelligence Committee of the Institute of Risk Management South Africa (IRMSA), I recommend this first edition of the South Africa Ri