Be prepared to weather the storm, world cup and strike

2010-09-23 00:00

Highlighted by recent global events, management have renewed their focus on strategic controls, coping mechanisms and the adequacy of recovery and business continuity plans.

Questions that companies have been forced to address of late, include:

— What happens if we lose our workforce for a few weeks?

— What happens if the demand for our product fluctuates dramatically (a possibility during a World Cup period for instance); and

— In the event of a natural disaster, are we in a strong enough position, and adequately prepared to weather the storm (or the flood)? It is vital that the impact and likelihood of the occurrence of these large scale events is considered by management as they represent very real risks to the enterprise. As a practical example, and certainly applicable when making reference to recent global events, for Louis Oosthuisen (Pty) Ltd, the cancellation of the next Major golfing tournament would be potentially identified as a risk with a high impact on future earnings; however the likelihood of occurrence is very low, which would lead to the overall risk magnitude, in relation to this particular event, being allocated a low rating.

Risk workshops, appropriately facilitated, are not solely internal and business operation focused. Many enterprises have identified the likes of natural disasters, loss of workforce, major customer demand fluctuations, and political unrest as possible major risks to business continuity.

This workshop environment is also beneficial for the identification of current controls and established plans and procedures that may be in place to cover the business should these risks manifest themselves. Once identified, the effectiveness of these established controls and plans requires specialist review and assessment to ensure that the business is sufficiently-equipped to adequately address these risks. Returning to the case of Louis Oosthuisen (Pty) Ltd, referring to the approach adopted during a particular ‘business venture’ at The Open at St Andrews, and drawing a parallel to the business world — being well prepared for all eventualities, staying the course through tough conditions, and leaving little up to chance will bring about success and develop a control environment sturdy enough to withstand any external factors, let alone the competition.

For more information call 033 347 7600.

Alex Winterbach

(Internal Audit, Risk and Compliance Services manager)

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