Page 29 - IRMSA Risk Report 2021

HOW “RISK MANAGEMENT” BECAME A
PERSONAL AND HOUSEHOLD TOOL
The year 2020 presented us with a reality stranger than any scenario: empty streets in all major cities,
no international travel, no crowds at major sporting events and economic activity virtually non-existent.
The present and the potential future became unlike anything that occurred in the past.

In 2019, most people would have explained “risk management” as a process used by organisations
to identify, evaluate, and manage uncertain future events to minimise how such events could affect
their objectives. To do this, organisations have risk specialists, internal audit functions, audit and risk
committees and independent auditors.

In 2020, “risk management” suddenly went viral. With the first lockdown, the three mitigating controls
to reduce the risk of catching the virus came into play: social distancing, wearing masks and washing
hands – with government urging us to follow a “risk-based” approach. But we still had to shop for
essential items and conduct other tasks which brought us into contact with the outside world. As
lockdown eased, we gradually returned to a more “normal” life: children going back to school, some
people going back to work, some working from home, and so on.

In our individual ways, we balanced the risk of returning to normality with the virus still around us, as
the earliest expected date for an effective vaccine only later in 2021. There was a wide range of human
reaction to the threat of the virus: ranging from no risk management (people casually or defiantly not
wearing masks, hosting house parties, gathering in crowds in rebellion against lockdown rules and not
adhering to social distancing to the majority of sensible people going about their daily routine of risk
management in deciding how to reopen their lives. Each individual decision has the risk of catching the
virus on the one side and the reward and joy of getting back to normal human contact and economic
and leisure pursuits on the other. There are no hard and fast rules other than the three mentioned
earlier and obeying the laws of the land, with politicians’ slogan for risk management - balancing lives
against livelihoods – a difficult tightrope to walk.

The bottom line is that risk management will never be quite the same again once this experience is
over. It will be a familiar household tool as well as a corporate tool for handling the challenges that life
poses.

SOURCE: ADAPTED FROM CLEM SUNTER, 2020.

“Risk Management” has expanded from an executive tool in the
corporate world to a household tool, used every day by ordinary
people to go about their daily lives.

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