Thursday
Aug 28th
| Risk Management Vital in this Uncertain Era – Experts |
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 Business people have been advised to seriously employ risk management tools in “these turbulent times” if they are continue securing meaningful earnings for their businesses. The Standard Chartered Bank hosted a seminar to discuss Risk Management with its Wholesale Banking clients at the Gaborone Sun last week. The event attracted a number of directors and chief executive officers from a wide spectrum of corporate and parastatal entities and was arranged in partnership with the Botswana Institute of Directors. In his opening remarks, the Standard Chartered CEO, Mr. David D Cutting, described the current era as “turbulent times” and advised that success in businesses will depend on how well risks are managed. He said banks were the right partners to have in times like these. “Our solutions provide you with the necessary tools to help you weather these storms, protecting the value of your assets and benefiting your business through a proactive approach to the management of uncertainty,” he said Briefing the guests on global financial markets, Mr. Steve Brice, the Regional Head of Global Markets, said the storm was far from over and the effects of the credit crunch have not yet abated, evidenced by the decline in the performance of stock markets around the world and a significant slowdown in the U.S economy, with threats of a recession. He said global inflation had risen significantly, mainly fuelled by record high crude oil and food prices, which have defied all efforts by major economies to curb them. Central Banks around the world responded to this rising inflation through increases in interest rates. However he challenged the audience to consider the effectiveness of interest rates as a measure to control Botswana inflation, which is largely imported from trading partners. Giving the key note address, Mr. Eric Pascal from the Standard Chartered Bank’s Risk Management Advisory team, emphasized the changing role of directors and Boards, with risk management now becoming an important responsibility of directors of companies. He gave a brief outline of the process of putting in place a structure that adequately identified, measured and managed key financial risks faced by corporations in “these turbulent times”. Pascal highlighted the need to acknowledge and recognize financial risks, with the aim of stabilizing earning streams. “Financial risks, which arise as a ‘by-product’ during the execution of core business, need to be reduced to acceptable levels,” he said. The risks that Pascal identified as relevant to entities all over the world including the Botswana market were volatility in foreign exchange rates, interest rates and commodity prices, all key inputs in the execution of core business. Another was credit risk, which may be caused by counterparty default; liquidity risk was risk that the company’s working capital would not meet commitments or payments as they fall due – risk inherent in operational processes. He recommended hedging solutions to mitigate these risks. |
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