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RISK INSIGHTS WELCOMES ANASHRIN PILLAY AS NEW ACTING CEO

After nearly three decades in risk management, the founder of Risk Insights Anushka Bogdanov will be stepping down as CEO of Risk Insights to take a medical sabbatical. She has recently been diagnosed with early stages of serious illness and will be focusing on treatment and recovery. Over this period, Anushka has been a role model and mentor for women across South Africa as a leader, educator, mother, daughter and business owner, her perseverance has been showing that woman can achieve success in all spheres of life.
Anashrin Pillay will take up the role of acting CEO of Risk Insights with primary focus on driving the Environmental, Social and Governance based ESG GPS model to the next level.

Some of Bogdanov’s career highlights include:
• Setting up trade finance limits for ABSA London in the 1990s when South Africa became part of the global economy and sanctions were lifted after the abolition of apartheid;
• Being part of Fitch International and rating banks across the globe for emerging market economies including South Africa and the rest of Africa;
• Leading a team of analysts and ensuring that Nedbank’s Basel II models for retail banking (home loans) being the first to be accredited by the South African Reserve Bank at the time;
• Pioneering risk and analytics department at the Development Bank of Southern Africa; establishing and leading first fully-fledged risk and analytics team at Development Financial Institutions in South Africa;
• Founding Risk Insights (Pty) Ltd 11 years ago and (among other successful projected which change risk management landscape in Southern Africa) building SA’s first Artificial Intelligence driven ESG Rating Model; model has been built with a team of young black data scientists from the township in 2020;
• Launching an e-learning platform and digital campus in SA during the COVID19 pandemic through partnership with a multinational company Tata Consulting Services to assist in the democratisation of education in our country,
• Serving on various boards and audit committees for the South African government institutions as well as private sector companies.

Risk Insight’s welcomes Anashrin Pillay, in taking over as acting CEO, previously served as Group Head of Investor relations at PPC, with his primary role to serve as the leader of ESG GPS for South Africa, Africa and the world. Anashrin has a Bachelor of Science degree in Applied Mathematics, Actuarial Science and Statistics and recently completed his PGDIP at Henley Business School in 2020 with distinction.
Anashrin is an investment professional with pan-African investment experience. He joined the stockbroking industry in 2005 as a junior analyst. In 2009, he was rated in the annual Financial Mail survey for analysts in the construction sector. In 2010, he joined Stanlib Asset Management as an industrial analyst and was responsible for covering diversified industrials and construction as part of the Stanlib Industrial Team. In 2014, he joined PPC as programme management officer in the office of the CFO, responsible for special projects. In this capacity he was successful in delivering a profit improvement programme in excess of R400m and was project lead on a transaction of more than R100m. In 2016, he was appointed as a senior corporate finance analyst involved in project finance reviews in various rest of Africa countries including (Zimbabwe, Rwanda, Ethiopia and DRC) and investigating M&A opportunities. In 2017, he was appointed as Head of Investor Relations at PPC. He also served as Chairman of the PPC Pension Fund Investment Committee and currently serves as a director on the board of the Investor Relations Society of South Africa.

We wish speedy recovery to Anushka Bogdanov and every success to Anashrin Pillay in his leadership new role.

Risk Insights

Response to the emergency budget June 2020

Dr Anushka Bogdanov
Managing Director, Risk Insights

The tough supplementary budget from the Finance Minister – and his warning that, despite interventions, unemployment remains a major challenge – is ample illustration of the risk knife-edge that South Africa is sitting astride. His assessment comes as our official unemployment rate has climbed to over thirty percent and will worsen once the lockdown numbers are calculated for the second quarter.

I welcome the R100-billion that has been set aside for what he terms a multi-year comprehensive response to the jobs emergency, as well as the President’s job creation and protection initiative. But the debate also has to move internally. So, as we sit at the edge of a jobs precipice, organisations – both in the public and private sector – also need to start thinking differently about new and unknown risks attached to employment.

I’d suggest that sick-pay programmes need to be revisited, to make sure both the company and the employee are properly protected. And there is no doubt that as South Africa moves beyond 100 000 infections and 2000 tragic deaths, the cost of providing healthcare and disability and life insurance is going to increase exponentially.

Risk units have to insist that boards of directors are aware of what will inevitably be a steep change in cost-structure dynamics. Conversely, directors have a duty to make sure their risk professionals are educated and fully up to speed with all critical issues on the employment front. They have a duty to make sure that key strategies are not only developed but constantly revisited, as the pandemic charts towards its peak and eventual decline. The bottom line of most companies – the world over and at home – is being negatively impacted, and absence of key staff is already having an impact on delivery and output. Therefore, it is vital that key employees and positions for which backup is needed are evaluated. This means cross-training programmes need to be developed. The Finance Minister is absolutely right when he says unemployment is the country’s greatest challenge right now. Proper internal-risk programmes can go a long way towards mitigating further corporate haemorrhaging.

NEW AI ESG SUSTAINABILITY RATING TOOL LAUNCHED TO RATE LISTED COMPANIES

NEW AI ESG SUSTAINABILITY RATING TOOL LAUNCHED TO RATE LISTED COMPANIES

SOUTH AFRCA’S first Environmental, Social and Governance (ESG) AI-developed corporate ratings tool has been launched.

Two years in the making, the product ESG GPS has been developed by Johannesburg-based risk management advisory and consultancy boutique Risk Insights. The online tool rates all companies on the JSE, and provides an ESG rating on a score of 1-4 – four meaning a strong ESG rating.

The tool is aimed principally at asset managers, development-finance institutions, banks and listed companies, all of whom need to augment ongoing valuations and expected losses, particularly in the Covid-19 influenced investment climate. The model also assists regulators with an ongoing understanding of crucial ESG factors that drive responsible governance and systemic risk. The Risk Insights ESG model was conceptualised and developed by founder and MD Dr Anushka Bogdanov, leading a team of young data scientists. Bogdanov has 26 years of international risk-management experience, and a PHD in International Financial Management.

Says Bogdanov: ‘Our ESG model was built specifically for South Africa, taking into account the unique operating and investing landscape. Our system also runs vital peer assessments, which are constantly needed in specific sectors. We have, unlike other international models, also rated an entire bourse in a single exercise. Given several massive corporate failures over the past decade through serious governance breaches, it’s clear that ESG criteria are critically important and need to be taken into consideration in borrowing and investor decisions, in an effort to prevent systemic risk.’ The key advantage of the Risk Insights model is that it takes into account the unique and challenging South African corporate and regulatory operating environment. Notes Bogdanov: ‘The ratings are fully transparent, and companies can and should continue working on all sections in the model to improve their ratings. By having an ESG rating, companies and asset managers are able to access sustainable impact funds growing worldwide at an exponential rate.’
Accessing the model is through subscription. Once you are a subscriber, you are given a unique code and password. Access to the information is based on a subscription agreement.

Bogdanov believes the Risk Insights model is ripe for the time. ‘The new-generation investor is not just looking at shareholder return, but also stakeholder return. This is reflected in how sustainable impact funds and green bonds have increased in volume and growth around the world.
The ESG GPS product will assist fund managers in accessing these funds. It’s now acknowledged that companies that have inclusive and meaningful social strategies – and responsibly include factors like race, gender, age and workable plans to deal with big issues like climate change and societal conflict – will be more successful in the future.’

Bogdanov believes all corporate entities are currently being impacted by these factors, and that valuation and risk will be priced up or down if responsible actions are not taken into account.

We recommend Nouriel Roubini’s latest piece for The Guardian.

Here’s an insight from one of the great contemporary economists on how the private and public sector should be engaging with the pandemic. At Risk Insights, we see geopolitical risks increasing; monopolies and attention to economic concentration risk being examined more closely; as well social disruption due to the fourth industrial revolution coming to the fore.

Confirmed list of our panel members

THE RISK YOU NEVER CONSIDERED…

Conscious Leadership has become so imperative to keep our world intact. From East to West, from developing to developed countries corporates drive the economic welfare of any state. They set the standards of doing business, influence governments when it comes to standards of conducting the business, create governance measures, define the wealth of a nation and showcase a country’s leadership capital.  Many corporates are failing to have any or exercise little real accountability to its outside stakeholders, i.e. employees, trade unions, societies where they operate, pension funds, and even to their own debt and shareholders.  (E)Environmental (S)Social (G) Governance accountability will force corporates to disclose initiatives to achieve more than just financial returns. Conscious leadership will drive values that create conscious capitalism.

Regulators are frustrated with failed companies and continue to impose penalties, warnings and onerous compliance measures. Corporate disclosure on financial and non-financial risk is critical for investors, trade unions shareholders, millennials and society at large that want to verify that brands and companies are responsible in keeping the planet safe and intact for future generations. The need for conscious corporates has given rise to impact investing and lending trends. Several prominent pension funds, asset managers and banks have begun placing huge emphasis on investing in sustainable investments. As ESG concerns are highlighted in mainstream and social media. The trend towards sustainable investments by prominent investment and pension funds will continue.

ESG ratings will impact the risk profile of a company over time due to cost of capital and cost of funds being an important financial factor when valuing or lending to a company thereby influencing  the Net Present Value (NPV) or Expected Loss (EL) calculation going forward. This ultimately means that credit granting, and investment processes will be affected accordingly. Risk appetite of investors and lenders will consider ESG as substantial factor with major impact on the pricing for the companies.

Climate change is a severe risk that humanity is facing, and it is imperative that all corporations measure, monitor and reduce their impact on this catastrophic risk that faces the planet. South Africa has suffered the aftermath of apartheid which still appears to be contentious. The ability to measure diversity and inclusion in corporations is a critical risk factor. Human capital and resource management which forms part of ERM will need to ensure a company’s diversity management strategy is inculcated top down and bottom up. Reporting on diversity management is critical as it is a mitigation towards, acts of war, terrorism and xenophobia and gender-based violence. Governance has failed in South Africa both in private and public sector resulting in a loss of public and investor confidence. Transparent reporting on governance structures is critical.  It is of utmost importance that South African companies move from a tick box exercise to fundamental disclosure on ESG and sustainability reporting.

There is has been uncertainty on how, what to measure when it comes to ESG…

Risk Insights Sustainability Rating Model has been created and bespoken to the South African environment. This model is based on AI and takes reporting complexity into a measurable and attainable sphere for all listed corporations. Join us on the 23rd of March, Risk Insights will unveil our Sustainability Ratings Model for South Africa at the Johannesburg Stock Exchange.

The Africa-Russia Summit

The Russia Africa Summit was held in Sochi on the 23-24
October 2019, chaired by Russian President Vladimir Putin and Egyptian
President Abdel Fattah el-Sisi together with African Union. This was a symbolic
event for Africa together with Russia for mutual cooperation for economic,
political, technical and cultural co-operation. The Soviet Union played a
pivotal role assisting South Africa fight against apartheid.

South African President Cyril Ramaphosa and his delegation
were also present at the summit. The summit showcased various opportunities
that South Africa can benefit from Russia such as agriculture, cyber
technology, mining digitization and nuclear medicine and many more exciting
exponential products and services that can be shared between both countries.

There are many South African companies that have invested in
Russia and strengthening economic ties is part of risk management and
mitigating geopolitical risk. South Africa plays a vital role for the rest of
Africa therefore understanding relationships and economic benefits for our
suppliers into Africa is an important part of credit risk management. Risk
Insights was privileged to have been a part of the summit.

ESG

Risk Insights had the pleasure to introduce the first ESG model in South Africa built with Machine Learning. The Model was presented at the 11th Premier Corporate Governance hosted by the Chartered Secretaries of Southern Africa. The presentation was led by Dr Anushka Bogdanov, Managing Director together with Thusani Khwanda, Data Scientist at Risk Insights.

Dr Anushka Bogdanov at 11th Premier Corporate Governance Conference emphasized ESG as Conscious Capital.

Dr Anushka Bogdanov , Thusani khwanda and Jeremy Maggs

The Riskinsights team also emphasised the importance for regulations/laws that need to be considered in ESG principals.

4IR AND LITERACY RISK FOR SA

The word 4IR (4th Industrial Revolution) or AI (Artificial Intelligence) has been making rounds everywhere in SA, either on the news, TV or the President when addressing our country. But, is SA ready to reskill its workforce in order to keep up with the global economy? Will our education system support this revolution?

Artificial intelligence (AI) is the simulation of human intelligence processes by machines, especially computer systems. These processes include learning the acquisition of information and rules for using the information, reasoning using rules to reach approximate or definite conclusions and self-correction.

AI enables machines to sense their environment, think, and in some cases learn, to take action in response to the environment and the circumstances underpinning it.

“Someday is now’’ According  to the  2018 hacker rank report over 65% of Coders did not learn how to code in school, but self-taught  or a combination of both. Although most computer science students are learning software development in universities, over half of all student developers say they’re partially self-taught. This prevalence of self-taught knowledge means two things: First, computer science programs or degrees lag behind the pace at which technology evolves. For skills that are growing in the industry today, students have to rely on self-teaching to learn.

Technology is moving so fast and the education system just keeps on falling behind steadily. There are so many policies that goes behind changing the education curriculum in SA. And as for AI on the other hand, new tech is developed or updated on a monthly basis if not daily.

Uber, WhatsApp, Tinder, all these billion-dollar companies did not exist 10 years ago. In fact, the most successful companies in the world are AI driven. Apple, Google, Amazon, Facebook, Tesla, Microsoft. Which leaves us with a question of how we align the education system with the future.

The biggest debate about AI is whether it will improve our lifestyles or replace us. The debate on AI between 2 billionaires Jack Ma and Elon Musk was the highlight of the  World Artificial Intelligence Conference on August 2019 in China. The Tesla and SpaceX CEO said ‘’ The biggest mistake I see artificial intelligence researchers making is assuming that they’re intelligent”, “Yeah, they’re not, compared to AI. And so, a lot of them cannot imagine something smarter than themselves.”

On the other hand, Jack Ma had a different view and said “I think that because of artificial intelligence, people will have more time to enjoy human beings. I don’t think we’ll need a lot of jobs,” further indicating that AI only means that people will have to work less than they usually do and have time to enjoy life.

Technology has been evolving in the past decades and at a faster pace now. Education is the foundation of any country’s progress. Access to broadband-free internet services will reduce educational infrastructure costs, to make it reach more of our children to help in the enhancement of our literacy rate in the country, this would create quality team leaders for the future, contributing to growth. Inclusive economic growth is key. Service providers such as Vodacom, MTN, Cell C and ICASA (Independent Communications Authority of South Africa) have a huge role to play in defining South Africa’s progress.

By Thusani Khwanda

Sustaining the Risk Climate in South Africa.

Sustaining the Risk Climate in South Africa.

According to the World Economic Forum’s 2008-2018 annual Global Risk Reports investors have a different view when it comes to the risk of their investments.

The environment, social and governance (“ESG”) risks have overtaken the economic and geopolitical risk. Looking at a credit rating, stock price movement, beta coefficient etc. is not enough for millennial investors, they are now questioning how sustainable their investments are and therefore, participating in investments that are aligned to their values – OUTCOME BASED INVESTMENTS

In September 2015, the United States Environmental Protection Agency (EPA) found that Volkswagen had installed software in the diesel engines to activate certain emissions controls during laboratory testing. The software caused the nitrogen oxide (NOX) levels to meet regulatory standards but outside of the laboratory these same engines emitted up to 40 times more NOX than permitted. Shareholder and customers reaction became evident as the share price dropped by 23% in less than 24 hours after the news broke.

Recent scandals in one of South Africa’s Mutual Banks has been a wakeup call for South Africa in terms of corruption and share price collapse in some of South Africa’s prominent corporates. This has raised concerns over governance and sustainable institutions that are built to last.

Let’s face it. ESG (Environmental, Social and Governance) risk is here, lawsuits will outnumber proxy votes in the years to come. It’s about time we choose the planet and people over profits to create sustainable outcomes.

At Risk insights we develop risk models that are in line with the Paris Agreement and furthermore we look into the governance structures and also take into consideration the social state of South Africa to see how that will impact … FUTURISTIC RISK MANAGEMENT

By Thusani Khwanda – Risk Analyst at Risk Insights