Page 23 - IRMSA Risk Report 2021

2.1 HOW TO CREATE A FUTURE FOR SOUTH AFRICA?

“Ground rush is a skydiving term used to denote what happens if you wait too long to pull the ripcord of your parachute. At first, you
tumble serenely through a blue-green blur, but at an altitude of 400 meters or so, the earth clicks into focus and the ground comes
rushing up to meet you. An instant later, you’re dead… So here we are, then, hurtling towards the ground at terminal velocity.”

Rian Malan (Introduction to the “The Rise or Fall of South Africa” by Frans Cronje)
There is significant truth in futurist Gerd Leonhard’s belief that although the future is uncertain, it is more uncertain the less we
influence it. In other words, we are able to make the future much more certain the more we take the drivers that can influence it
into our own hands – and shape them the way we want them to be. South Africa’s history over the last twenty to twenty-five years is
a dire accusation of the failure by many of us (as citizens of, and organisations in, this beautiful country) to take charge of our own
future in a focused, coherent way. This has led us to a point where the possibility of a failed state, in a debt trap, has become more
than a theoretical proposition.

Those of us who are active contributors to the economy pride ourselves on the fact that we are dedicated cogs in a machine that
keeps society alive. But, looking at ourselves critically, what role do we really play? We would argue that the practices of creating
scenarios, strategies, and risk management frameworks actually destroy value in the economy – unless, and only unless, they lead
to a more certain future; a future in which we are able to plan better and optimise our limited resources to benefit more of us. In
this context, scenarios, strategy setting, and risk management are closely related elements in our quest to create a more certain
future. Risk appetite (the nature and extent of risk we are willing to take), which in many cases remains an abstract concept, plays a
key role in determining the risks we should take in our pursuit of reward. If our risk appetite framework is not a reflection of our
organisation’s strategy and budget (the strategy expressed in numbers), it is not a useful influencer of the future.

Scenarios, as descriptions of how things may possibly happen in the future, are the starting point in the process of creating our
future. In leading South Africa to a more certain future, leaders of all organisations, in all sectors of the economy, must clearly
understand:
• the most likely scenarios that may materialise in the world and in South Africa;
• how the strategies that we adopt could contribute to, or detract from, our sustainable success;
• how risk appetite is the link between strategy and the scenarios that may materialise;
• how we can implement risk mitigating strategies that would -
• influence a preferred scenario to materialise; and
• enable us to prosper if one, or a combination of, defined scenarios become our reality.

Scenarios tell us what could happen.
Strategies are our plans to make what we
want to happen come to be. Risk Appetite
is the type and extent of risk we take to
implement our strategies, as scenarios
around us change.

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