RED FLAG RISKS FOR 2023

Riskonet Africa has flagged several risk concerns for South Africa in 2023. These include political upheaval; financial volatility; the ongoing energy crisis; the deterioration of infrastructure; the migration of skilled labour to safer and more stable countries; an increase in violent crime; low investor confidence; and climate change.

‘2023 is, in many ways, going to be a year of uncertainty and volatility,’ says Chris Brits , CEO of Riskonet Africa. He continues: ‘It’s inescapable. As such, it’s crucial for companies to calibrate their structures and strategies for risk management as we head into a new year.’

Riskonet reports that a key consideration should be South Africa’s current political landscape, with major shifts and factional concerns on the horizon for the ANC. A non-functional parliament and continued upheaval around our presidency would send shockwaves through financial markets and severely knock investor confidence. Significant foreign disinvestment is already underway.

With former President Jacob Zuma in court, Brits says we need to factor in possible unrest the likes of the KZN riots and the possibility of violence and bloodshed cannot be discounted.

Brits says South Africa also needs to consider the continued impact of loadshedding, with the implementation of stages 6 through 8 an enduring certainty.

The recent resignation of Eskom’s CEO André de Ruyter is cause for serious concern. Anarchy at power stations is certainly a risk to look out for.

‘As reported by BusinessTech, we’re facing incredible difficulty due to Koeberg 1 going offline. That’s a loss of up to 900MW (almost one stage of load shedding). The unit is expected to remain offline until at least the middle of 2023. Many projects aimed at getting more power onto the grid are only due to take effect in 2025. Our power crisis is also going to result in further job losses and an increase in poverty.

‘The ripple effect is real. We can expect an increase in violent crime and civil unrest, as well as the continued deterioration of infrastructure and public transport.’

Brits says this turbulence and instability will continue to drive skilled labour overseas to greener and safer pastures. According to the African Youth Survey of 2022, it’s expected that the continent faces a huge challenge in the coming years – shockingly, more than half the people between the ages of 18 to 24 who were surveyed are considering emigration.

Also of utmost importance is the impact of climate change, with bigger and more severe weather events expected. We’re up against flooding, storm damage and, in some areas, devastating droughts.

‘We simply cannot move into a trying 2023 flying blind,’ says Brits.’ An awareness of risk will get you ahead. Ensuring that you have the right partnerships and risk-assessment tools in place will get you further.’

‘If the last few years have shown us anything, it’s that the risks we report on could very well only be the tip of the iceberg. We always must leave room for the unexpected. With proper analysis and preparation, these shock events can be managed. Businesses can survive. We can protect both people and profit. We can meet even the most trying circumstances head-on. If we’re going to see 2023 work in our favour, we need to collaborate and consolidate. We need to set out with risk and insurance front of mind.’