Week 35 ending Saturday 31st
Ben Pieters - the Business Support Specialist
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Welcome to 'Navigating GRC' your guide through the intricate landscape of Governance, Risk, and Compliance.
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Please note that we identify the author and the name of the publication the article appeared in, and directly extract aspects we believe would reflect the idea or thought expressed therein.
Lego Thrives Amid Higher Business Cost and a Slowing Toy Market
Griffin Kelley reports in The Daily Upside that nothing can knock the crown off Lego’s cylindrical head.
Legos transcend age easier than most toys. While little kids might be interested in superhero-themed sets, adults find comfort in more sophisticated designs that mimic artistic flower bouquets and landmarks… and the superhero-themed sets, too.?
Lego has collaborated with an ever-growing range of brands and intellectual properties including Batman, Star Wars, Bugatti, and Adidas, so no matter your interest, there’s probably a Lego out there for you. Additionally, the company has 10 theme parks, and a handful of successful theatrical releases, and it recently partnered with Epic Games’ “Fortnite” — the most-played video game across all platforms in 2023.
Lego CEO Niels Christiansen told the Financial Times. “The Lego brand globally is performing very well.”
Meanwhile, the rest of the toy industry is tepid.
Not even Lego’s environmental aspirations can slow its growth. The company has been introducing renewable and recycled materials to its bricks instead of relying on oil and other fossil fuels for its manufacturing.
I believe that Lego is globally the largest vehicle tyre manufacturer based on volume! Indeed a success story like no other. The focus on governance and procedures compliance by management is relentless.
Rethinking Risk Management for the Modern Age
Michael Rasmussen writes in The GRC Pundit that in today’s rapidly evolving business landscape, risk management is no longer just about avoiding pitfalls—it’s about navigating the uncertain waters of opportunity and danger with agility and resilience.
Effective risk management today requires a dynamic, forward-thinking approach that not only protects against adverse events but also leverages risks as catalysts for growth and innovation.
The modern approach to risk management is about mastering the art of navigating through an intricate web of opportunities and threats with both agility and resilience.
This new paradigm recognizes that risk is not just a challenge to be mitigated but an integral component of strategic decision-making. In an environment characterized by relentless change and uncertainty—driven by technological advancements, global interconnectedness, and shifting market dynamics—organizations must develop a proactive and adaptive risk management strategy.
This means anticipating potential disruptions, seizing emerging opportunities, and building organizational resilience to bounce back stronger from setbacks.
I’ve questioned why business continuity often operates in a silo, buried deep within the organizational structure, rather than being an integral part of enterprise and operational risk management.
But let’s be clear: resilience alone isn’t enough. Agility is equally crucial.
Teddy Roosevelt wisely remarked, “Risk is like fire; if controlled, it will help you; if uncontrolled, it will rise and destroy you.”?
Judge Mervyn King of South Africa, stated “Enterprise is the undertaking of risk for reward.”
The bad news about electricity prices
Shaun Jacobs writes in the Daily Investor that electricity prices are set to rise further in the future as Eskom says its tariffs do not yet reflect the cost of producing electricity in South Africa.?
Eskom revealed its Summer Outlook 2024/2025, indicating that the utility’s improved performance will continue.? It expects no load-shedding to be implemented for the next seven months due to the drastic improvement in performance at its coal-fired power stations.?
In the worst-case scenario, Eskom said it would keep load-shedding to a maximum of stage 2 in summer.?
CEO Dan Marokane said that since April 2024, Eskom’s performance has been consistently above expectations, and there has been a structural shift in the performance of the fleet.?
However, Eskom’s management team remains concerned about the utility’s financial health. Its debt burden remains significant, and municipalities owe it over R80 billion.? Eskom’s historical underperformance has also resulted in the utility’s cost of producing electricity skyrocketing.?
A study from Reserve Bank economists found that electricity price increases have largely stemmed from Eskom’s need to service its massive debt pile.
This statement sharply contradicts Eskom's view that its tariffs do not yet reflect the cost of producing electricity.
These rapidly increasing costs result from mismanagement and poor capital allocation. Eskom spent R680 billion between 2007 and 2021, with poor results and a decline in performance.?
The current electricity pricing regime ties prices to Eskom’s costs, resulting in decades of mismanagement and crisis spending being passed on to consumers.? Poor risk management.
SCA reaffirms the JSE’s power to regulate corporate reporting
Pierre Swart and Siyabonga Nyezi of Fasken report in Lexology.com that the Johannesburg Stock Exchange (“JSE”) and the Financial Services Tribunal (“Tribunal”) are among various authorities empowered with regulatory oversight. In the recent judgment of Trustco Group Holdings Limited v Financial Services Tribunal and Another[1], the Supreme Court of Appeal (“SCA”) reaffirmed the JSE’s authority to direct a listed company to restate its annual financial statements that were non-compliant with internationally accepted reporting standards.
The JSE, exercising its oversight powers, conducted a review of Trustco’s 2019 financial statements and took issue with the treatment of the loans and the reclassification of the inventory. Following an investigation, the JSE notified Trustco that these entries in its financial statements were non-compliant with the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board.
The SCA confirmed the wide powers of the JSE and referred to sections 10(2)(m) and 11(1)(g)(v) of the JSE Act, which empowers the JSE to: ‘do all other things that are necessary for, or incidental or conducive to the proper operation of an exchange and that are not inconsistent with this Act’ and ‘to impose any penalty that is appropriate in the circumstances.’
A failure to do so may result in a restatement order from the JSE. An equally important takeaway from the judgment is the reaffirmation of the JSE’s oversight powers (as a self-regulatory authority) to ensure that accurate information is provided to investors and the markets at large.
This case should serve as a caution to listed companies to ensure compliance with IFRS, and that shareholders are always timeously informed of any reclassification.
Get ‘em while they’re hot
Interesting article in Business Insider.
It’s a great time to be a wind turbine service technician a solar photovoltaic installer, or a nurse practitioner.
For many job seekers, landing a new gig has proved challenging as hiring cools and competition intensifies. But looking at where the labour market is headed could help job hunters find industries in need of workers.?
Careers in solar and wind power will feel the love in the next decade as we look to renewable energy. Wind turbine service technicians are expected to see an increase in employment of around 60% by 2033.?
Other jobs, particularly those in healthcare, remain wise career choices. Nurse practitioners, physician assistants, and physical therapist assistants also made the list of fastest-growing jobs.?
But just because there are going to be plenty of jobs doesn’t mean they’ll pay well.
Then, of course, there’s the other end of the spectrum. As fast as some jobs are growing, others are losing steam.
Workers may have one saving grace. AI is simply too expensive to steal many jobs. So while your job may be safe for the immediate future, it may be time to start looking into a hot new career path.
AI at the Paris 2024 Olympic Games
Morgan Lewis of Brabners writes in Lexology.com that the International Olympic Committee (IOC) — as well as individual Olympic associations, athletes, coaches and broadcasters — all relied on the use of integrated AI technology both in the lead-up to and during the Games to support training, refereeing and broadcasting.
Several important aspects were identified. We only deal with a few.
Athlete performance and training
领英推荐
Refereeing and real-time data
Enhancing the viewer experience
All use of technology in sports introduces various legal challenges that require careful consideration and proactive management to safeguard the rights and interests of all parties involved. As the use of technology and AI in sporting events grows, national governing bodies will likely introduce stricter rules around the use of the technology to ensure fairness, integrity and inclusivity while maximising the experience for both participants and fans alike.
Big EFT changes for South Africa
A staff writer reports in BusinessTech that South African banks will implement a big electronic funds transfer (EFT) payment change next week, impacting direct payments and debit orders.
The change followed the Common Monetary Area (CMA) regulators’ decision to discontinue processing EFT payments and collections within the CMA.
The CMA was enacted in July 1986 and originated from the Rand Monetary Area (RMA), which was formally established in December 1974.
The Common Monetary Area links South Africa, Namibia, Lesotho, and Eswatini into a monetary union.
Each country has the right to have a national currency. These currencies are only legal tender in their own countries. However, the South African rand is tender throughout the CMA.
Historically, low-value cross-border payments within the Common Monetary Area have been processed through South Africa’s domestic retail payment system.
However, treating cross-border payments as domestic transactions was not compliant with international Anti-Money Laundering and Combating of Financing of Terrorism (AML/CFT) standards.
This makes it difficult to track and trace the origin and sender of funds and prevent and address money laundering.
South African account holders will from ( September 2024 no longer be able to make EFT payments to account holders in other CMA countries.
South Africa’s big retirement changes
Once the two-pot retirement system is implemented this week, South African retailers and banks will benefit from increased consumer spending.?
The new retirement system will allow South Africans to access a portion of their retirement savings before maturity to cover emergency payments.? However, many asset managers and economists expect individuals to withdraw money from their savings pot to spend on discretionary items, particularly clothing.?
“While some surveys suggest that up to 50% of the money withdrawn will go to paying down debt, we argue that a large portion will simply be used for general consumption,” Stanlib senior economist Ndivhuho Netshitenzhe said.?
He explained that the increased cost of living in South Africa has resulted in basic necessities taking up more of disposable income, resulting in minimal spending on discretionary such as clothes and appliances.?
Amid this pressure on consumers, the government is giving South Africans access to long-term savings – effectively implementing a form of stimulus.
Netshitenzhe said this boost will likely be short-term, with increased spending in the next year offset by declining savings and a smaller pool of capital to fund investments in South Africa.
Post-1996 farmland restitution projects
Tony Carnie and Naledi Sikhakhane report in Daily Maverick that nearly three decades after SA’s formal land claims process began in 1996, many farmland restitution projects are floundering or have collapsed, raising questions about the extent to which the billions of rands of state expenditure has benefited the claimant communities.
The government has bought nearly four million hectares of farmland and spent at least R58-billion to compensate or restore ownership to black communities dispossessed of their ancestral property during colonisation.
In Kwazulu-Natal, a mere 3% of Communal Property Associations – the legal bodies set up to represent land claimants – are compliant with basic legal requirements, often resulting in large swathes of formerly productive land lying unfarmed or underutilised.
It has also raised broader concerns about the impacts on national food security, rural jobs, animal disease control and South Africa’s agricultural economy.?
Rory Bryden, a dairy farmer from Kokstad who has been offering his experience and expertise to assist land claimant beneficiaries at a nearby farm, noted that commercial farmers could secure funding by bonding their farms.
However, where land claimants did not receive title deed ownership they were not able to raise the substantial capital needed to run a commercial farm. He said the most viable option was for land claimants to enter into joint ventures with commercial farmers to lease land for five to 10 years, while community members gained the necessary skills to manage farms commercially.
Sadly, he noted, not all land claimant communities were amenable to such mentorship and leasing proposals.
Homeownership is still the Dream. But Should it Be?
An interesting and thought-provoking article appearing in The Daily Upside.
Home prices have never been higher, and interest rates haven’t been this steep since the ‘80s. Meanwhile, property taxes in desirable areas are on the rise, all while the costs of property insurance and routine maintenance soar.
Homeownership is still the Dream. But Should it Be?
Translation: Buying a home is expensive. And so is owning one.?
This means homeownership isn’t the smartest move for everybody.
In other words, homeownership, viewed as the bedrock of personal finances for over a century, may no longer be the no-brainer life decision it’s long been.
The upward pressure on home prices is making this the most unaffordable housing market in history. In July, a poll of 1,502 adults found that 89% of respondents said owning a home is essential to their vision of the future, but just 10% said it’d be easy or somewhat easy to achieve.
Compared to the rest of the population, more people in finance rather rent than purchase an apartment. Investing the funds otherwise spent on a home, largely erases the rent payments over a period of 5 years or more.
Read the article here >
And while soaring costs typically price out lower-income buyers, this time they’ve kept high-income earners on the sidelines as well. One population segment that you’d think would know a thing or two about investments is starting to prefer the renter’s life.
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