Mitigating risk ahead of polls is key for business

The Chinese interpretation of the word risk is that of danger and opportunity combined, which gives us good insight as to how we should react when faced with any form of risk.

From the basic laws of nature to complex laws of physics, there are elements of risk management principles that are applied.

The science of risk management is drawn from these two words and supported by principles that draw from everyday living.

We strive every day to eliminate danger by working hard to earn money and eliminate the danger of hunger or illiteracy of generations.

We also take opportunities by identifying possibilities of career changes or investments in assets that improve our financial status. These are the hallmarks of good risk management which we can draw from even as Kenya nears the General Election in 2017.

The mention of general elections will bring to fore the same two words as risk: danger and opportunity.

Economically, this period is prone to provide opportunity for quick cashflows and unbudgeted income to individuals through handouts and to groups through provision of services for political aspirants and parties.

While this supports good micro-economic stability, our past history of electioneering, we face the danger of reduced international support in key market sectors like the Nairobi Stock Exchange and increased government debt burden to finance elections as a one-off event while still ensuring business as usual especially on development.

This even gets more complex when we look at governments from both the national and county levels where the executive arms of governance are enshrined in our constitution and form the bulk of elective positions.

According to the Bertelsmann Stiftung’s Transformation Index (BTI) 2016 report, the Kenyan economy has been growing steadily from 2010, but the majority of the population has enjoyed only limited benefits. Economic growth has recovered to pre-2008 levels (the year of the post-election violence) of above 6 per cent annually.

Socially, even without reference to whichever class in society one currently finds themselves, the same two words resonate: danger and opportunity.

There are those in society who will take the opportunity to drive their agenda at all costs and those who will find themselves dealing with the dangers of unpatriotic behaviours and disenfranchised individuals.

Dependent on demographics, religious inclination, tribal groupings and community aspirations, these will result into opportunities for social growth or dangers for social evils.

From a personal and business perspective, elections are associated with risks: danger and opportunities. In the first instance, many will see the dangers to their personal lives, lives of those they are responsible for and assets they own based on the electioneering process and outcomes.

For businesses, those within the industries that supply goods and services that are consumed in this period will see opportunity while those whose business activities or facilities can be affected by disruption and total loss see danger.

As the elections draw closer, none of us can say we do not see either danger or opportunity and therefore we must make the right choices now in preparation.

Intangible assets

Good planning requires that we identify what measures we need to take to mitigate the risk and take the best options to ensure growth and prosperity before, during and after the elections.

The accumulation of premium payments from time to time guarantees protection when an individual or business experiences a loss thus providing a safety net.

Identifying what type of insurance to purchase to safeguard risks is not a relatively technical process though it will require diligence in evaluation and assessment.

For an individual to determine the most appropriate personal insurance cover to take will be a function of financial position, lifestyle, real exposure or even potential exposure.

The Centre for Strategic & International Studies indicated that Kenya’s post-election violence in 2007-2008 resulted in 1,133 casualties, at least 350,000 internally displaced persons (IDPs), approximately 2,000 refugees, the destruction of 117,216 private properties and 491 government-owned properties including offices, vehicles, health centres and schools.

Economic growth has recovered to pre-2008 levels (the year of the post-election violence) of above 6% annually. It is therefore important to focus on safeguarding the assets starting with the human resource to the physical assets and finally the intangible assets acquired over time.

Even as we move into the election period, the promise of danger and opportunity still holds true.