North Africa is undergoing dramatic social, technological and economic changes. This adds to the responsibility that risk professionals have in every industry: to be as vigilant as they can in protecting their organisations. With so many variables to contend with, the scale of the challenge can be quite remarkable.
Anybody familiar with North Africa knows that it offers some contrasting narratives. On the one hand, there are markets struggling with extremely onerous political problems. On the other, there is the proliferation of renewable energy projects, start-up incubators and online banks. Progress on these fronts shows that even in challenging circumstances, technology can make a real difference. It is becoming increasingly clear from looking at other regions of the world that creating a more sustainable future for the area depends on people harnessing the power of innovation in as many areas as possible.
Happily, the number of ways in which risk managers can use the power of technology to help protect their organisations is growing by the week. With innovation increasingly coming in the form of software and online services, Internet access is enabling the use of modern risk management solutions in places which were previously left far behind the cutting edge. While the use of the Internet and, therefore, the growth in the online footprint of citizens continues to grow, so too does the range of solutions available to risk managers.
This is not to say that modern solutions can always simply be parachuted into the region. There are countless commercial technologies, which have been developed elsewhere in the world, that remain difficult or even impossible to implement in the markets of North Africa for various reasons. The presence of significant informal economies, for example, undermines the integrity of the data required to create the kinds of databases taken for granted in the more developed markets. There is also the difficulty of dealing with the universal problem of needing to legislate constantly to keep up with developments in technology, which consumes valuable parliamentary resources.
But the demand for technological solutions, both from citizens and organisations, is undoubtedly very strong. Mass uptake of mobile banking across the continent has happened strikingly quickly, for example, and mobile industry umbrella group GSMA predicts that mobile technologies and services will account for 7.6% of Africa`s gross domestic product (GDP) by 2020. The enormous success of mobile technology, in general, provides a standing demonstration of just how quickly progress can be achieved when people are given access to useful technologies. And for risk managers, growth in the use of digital solutions helps centralise valuable information that would previously have been widely dispersed.
THE PRESENCE OF SIGNIFICANT INFORMAL ECONOMIES, UNDERMINES THE INTEGRITY OF THE DATA REQUIRED TO CREATE THE KINDS OF DATABASES TAKEN FOR GRANTED IN THE MORE DEVELOPED MARKETS.
With time, more and more data is becoming available on people and businesses; services have and are being developed that put this information to good use. Innovations like electronic identity verification via application programming interface (API) were all but unthinkable until recently, but thanks to developments in technology it has never been easier to find who you`re dealing with.
The peculiarities of the various markets of the region mean that not all solutions developed elsewhere are immediately able to be implemented uniformly. With many relevant technologies requiring strong Internet infrastructure, good availability of public records or widespread use of bank accounts, there are obviously limits to what can be achieved in the absence of these conditions. But even these structural problems are amenable to innovation, as the people of India discovered last November.
The Indian government`s surprise decision to demonetise the Indian economy overnight was an attempt to rid the country of counterfeit currency and to push people to open bank accounts. The ambitious plan, coupled with other long-term efforts, has seen the un-banked population fall dramatically in the last few years.
In Egypt, only around 10% of the population have bank accounts, giving the largest economy in the region the dubious honour of having the largest unbanked population in the world. This generates a risk of its own, while simultaneously making it harder to calculate just how much. Clearly, the more transparent and open the financial system is, the easier it is for people and businesses to mitigate financial risk. Reducing the un-banked population of North Africa is one area in which solutions developed elsewhere could be put to excellent use.
The role that technology can play in helping to mitigate risk is significant, but technology is no substitute for hard work. There is much that still needs to be done to unlock North Africa's enormous potential. Risk managers have a key role to play in this process, helping their organisations to manage the complexities of doing business. By continuing to innovate, work hard and make the most of our opportunities, we can make real progress in changing the region into an altogether less risky place.