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Innovative risk management can aid service delivery

Published

2016

Mon

11

Jul

 
By Pride Choruma, National Manager: Public Sector, Lion of Africa Insurance
 
The Public Sector risk management framework has great complexity in the modern day South Africa. The question is: How to maximize the limited financial resources available in the public sector? There is a massive investment in infrastructural development to re-ignite economic growth. At the same time, an increase in labour and service delivery protests are already taking their toll on municipalities, posing a threat to sustainability.
 
The numbers speak for themselves: the recent student protests, for example, led to damage claims of nearly R100 million in less than two months. SASRIA also reported in its 2015 integrated report that claims in that financial year spiked by 54% due to labour and service delivery protests (which had increased 33% over 2013/14). More recently, Metrorail in Cape Town has been the target of protests and vandalism.
 
Violent and disruptive actions such as these have become more common and are clearly cause for concern. And with this now being a fairly common occurrence, the potential for increased unrest has been growing.
 
Local, district and provincial authorities as well as State Owned Entities, are therefore at far greater risk during these times, which calls for appropriate measures to manage their risks. Transferring risk through insurance might be one of the most effective ways to achieve this. Insurance offers cover for assets and infrastructural projects. These entities need to cover themselves against damage to existing infrastructure; to cover for new and ongoing projects that may further hamper their ability to deliver their services to communities. This will also help them to align with sound risk management controls and good governance protocols, which apply to all organisations, to mitigate threats to their ability to operate effectively.
 
While an institution such as SASRIA offers some protection against undue financial losses, proactive public sector managers are well advised to seek additional insurance solutions to cover themselves against exceptional losses that can go above SASRIA limits. Firms such as Lion of Africa Insurance are well positioned to provide appropriate top up cover that will offer additional compensation to public institutions against such potential catastrophic events.
 
While general insurance cover may be sufficient for general circumstances, public sector managers also require nimble, intelligent insurance solutions that offer additional cover for extraordinary circumstances.
 
The same principle applies to exceptional events such as natural disasters and changing weather patterns. Coastal regions, for example, are at a far greater risk from such events than they were 10 years ago and this should be factored into any risk management and mitigation strategy.
 
Insurance, therefore, is no longer a matter of one size fits all – it requires an appropriate solution designed to meet a specific need or threat.
 
Source: Cambial Communications
 
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