RISK OUTLOOK IN NIGERIA

With the fluidity, frequency and vagaries of volatility, uncertainty, complexity and ambiguity (VUCA ) across the globe and distortions within the Nigerian economy recently, the risk landscape has come under severe disruptions with consequent impacts on the business environment leaving decision makers with a lot to chew. Realities in the Nigerian economy and in the global space are reinforcing disruptions that will necessitate societal concerns and responses. Therefore, building resilience by leading with values, adapting to change, taking proactive steps and expanding agility in the face of disruption have become critical ingredients for success. RISKS TO WATCH OUT FOR

The following trends will likely shape happenings going forward:

1.?????? Food price spikes and food insecurity may persist? and could inflame conflict, heighten ethnic tensions, destabilize governments, and lit the fuse of protest and social unrest albeit in some parts of the country with possible impact on human and vehicular activities as well as factory operations.

“I think we need to prepare for the worst, and so I support energy efficiency measures.” ??-? Todd Young????? ?

in some parts of the country with possible impact on human and vehicular activities as well as factory operations.

2.?????? Higher energy costs (PMS, diesel, aviation fuel and electricity) leading to high operating expense and contraction of revenue and profit margins of companies. This will certainly drive prices of goods and services upwards

3.?????? Proliferation of regulatory demands. Given government drive using its agents to expand the tax net and grow its non-oil revenue base, it is believed that as the economy progresses, regulations will become more burdensome, broader in scope and complexity, with harsher consequences for non-compliance. So, companies need to take the initiative of cooperating more to identify problems before they spin out of control. Enterprise-wide compliance coverage (plants and depots) should be firmed up.

4.?????? Flood and environmental disasters. The National Emergency Management Agency (NEMA) has reported that 1,048,312 people have been affected by severe flooding in Nigeria between April and September 2024 and taking this against the backdrop that the Federal Government, through the Federal Ministry of Water Resources and Sanitation and the Nigeria Hydrological Services Agency (NIHSA), identified 31 states as high-risk areas for significant flood impacts in 2024, shows that there is most likely going to be more internally displaced persons and humanitarian interventions across the country.

5.?????? Rising logistics costs and supply chain disruptions (inbound and outbound operations). In the Nigerian economy, the region-sensitive differentiated prices of diesel and petrol as well as the worsening security situation will impact on the operational cost of 3rd Party Logistics (3PL) operators which might lead to review of service charges.

6.?????? Disposable income will continue to bleed profusely as the inflationary pressures continues. The likelihood that labour unions may fallout with the government due to delay in paying agreed minimum wage to workers is not debatable. With inflation rate of about 34%, customer buying decisions may be heavily skewed in favour of comfort and value range of products and consumers may become more price sensitive.

7.?????? Cybersecurity and Data Governance: The growing sophistication and variety of cyberattacks, amidst rising unemployment rate, may continue to wreak havoc on organizations’ brands and reputations, often resulting in disastrous financial impacts. There is the risk that organizations that are not sufficiently prepared to manage cyber threats may experience disruption and reputational harm Risk Response:

The following anticipatory measures in addition to existing plans should be considered:

1.?????? Sales promotional activities should be activated to stimulate customer demand for products particularly for operators in the manufacturing sector.

2.?????? Aim for end-to-end supply chain visibility. Supply chain visibility is about knowing where inventory is on its journey through your supply chain, and if any issues are going to affect the delivery timeline.

3.?????? Cybersecurity teams should actively monitor for system vulnerabilities, while also watching for suspicious activity and unauthorized access. It is also important to conduct regular education of users to ensure they are vigilant when it comes to phishing scams and malware attacks.

4.?????? Ensure enterprise-wide regulatory compliance coverage, scaling up from critical to essential, plants to depots and adequacy of documentation as well as early warning control system.

5.?????? Engagement and consultation with internal labour unions.

6.?????? Ensure service level agreement with vendors are established and monitored.

The social, technical, economic, environmental, and political ("STEEP") trends ahead are likely to be susceptible to wide distortions and swings which might affect business projections. Therefore, identifying the driving forces that can impact organizations through PESTLE analysis and setting out scenario planning to proactively prepare to deal with uncertainty will assist to build resilience and reposition organizations????????????????????????????????????????????????????????????????????????????????????????????????????????