Stage 8 Loadshedding Imperils the ‘Socio-Economy’

The Institute of Risk Management South Africa (IRMSA) believes there are significant risks posed by the potential implementation of Stage 8 mid-winter loadshedding, announced by Eskom.

This development we believe presents a grave threat to the country's fragile economy and social fabric and calls for immediate action from risk managers across all sectors.

Stage 8 loadshedding, characterised by long and frequent power outages, represents a severe disruption to businesses, critical infrastructure, security and exacerbates the livelihood risk. The sustained power cuts at such an intensity will have far-reaching consequences on existing risk response strategies which will most likely fall short of providing alternative energy long enough to run ‘business-as-usual’. This will lead to significant financial losses, decreased productivity, and potential damage to essential equipment and machinery and communication.

The next big question to ask and answer is how will it impact on potable water supply and availability. The implications of Stage 8 loadshedding are particularly pronounced for industries heavily reliant on uninterrupted power supply, such as manufacturing, mining, and telecommunications.

South Africa's economy, already grappling with numerous challenges, including the effects of the global pandemic, economic inequalities and extreme unemployment, cannot afford the added strain of Stage 8 loadshedding.

The potential direct consequences include even higher unemployment, higher cost of living, and then off course decreased investor confidence, reduced foreign direct investment and a decline in international competitiveness. Furthermore, small, and medium-sized enterprises, which form the backbone of the economy, are at heightened risk, if not already at their risk bearing capacity, potentially leading to business closures, job losses, and increased socioeconomic hardships.

Considering these risks, it is imperative for risk managers to take immediate initiative- taking steps to refresh their business impact assessments, review the effectiveness of existing risk response strategies and business continuity plans as well as building rudimentary scenario outcomes of the potential impact of Stage 8 loadshedding. IRMSA believes risk managers to focus on the following key areas:

1. Risk Assessment and Business Continuity Planning: Conduct a thorough assessment of the organization's vulnerabilities to power outages, reassess existing business continuity plans, and develop strategies to minimize disruptions. Identify critical processes, prioritize resource allocation, and establish contingency measures to ensure operations can continue during power cuts.
2. Energy Efficiency and Diversification: Implement energy-efficient technologies and practices to reduce reliance on the national power grid. Explore alternative energy sources, such as solar or wind power, and consider investing in on-site generation capabilities to supplement the main power supply.
3. Supply Chain Management: Engage with suppliers and partners to assess their ability to withstand power disruptions and develop contingency plans together. Evaluate the resilience of supply chains and identify potential bottlenecks or vulnerabilities, seeking alternative suppliers where necessary.
4. Communication and Stakeholder Engagement: Maintain open lines of communication with employees, customers, suppliers, and other relevant stakeholders. Keep them informed about potential disruptions, recovery plans, and any changes in operations to minimize uncertainty and manage reputational risks.
5. Collaboration and Knowledge Sharing: Collaborate with industry associations, government bodies, and other organizations to share best practices and insights on managing the risks associated with Stage 8 loadshedding. Participate in forums and workshops aimed at collectively addressing the challenges posed by power outages.
6. Reconsider organisational strategies against the scenarios that may play out at a stage 8 level of loadshedding. Strategies that would be considered ‘business as usual’ may need to be revisited and realigned to remaining sustainable during this time.

IRMSA encourages all risk managers to prioritize these actions and remain vigilant in assessing the evolving situation. By taking proactive measures to manage the risks and dangers of Stage 8 loadshedding, we can safeguard our businesses, protect our economy, and foster resilience in the face of adversity.