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Botswana: Standard Charter Discusses Risk Management
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Mmegi/The Reporter (Gaborone)
18 July 2008
Posted to the web 18 July 2008
Standard Chartered Bank recently hosted a seminar to discuss Risk Management to its Wholesale Banking clients at Gaborone Sun.
The event attracted about 80 Directors and Chief Executive Officers from a wide spectrum of corporate and parastatal entities, and was arranged in partnership with the Botswana Institute of Directors.
In his opening remarks the CEO David D Cutting said: "We live in turbulent times and the success of our business as well as yours will depend on how well we manage the risks we see and prepare for the ones that are not so easy to see.
Standard Chartered Bank believes that we are the Right Partner to have in times like these. Our solutions provide you with the necessary tools to help you weather these storms, protecting the value of your assets and benefiting your business through a proactive approach to the management of uncertainty."
Briefing the guests on the state of global financial markets, Steve Brice, the Regional Head of Global Markets indicated that the storm is far from over, explaining that the effects of the credit crunch have not abated yet, evidenced by the declines in the performance of stock markets around the world, and a significant slowdown in the U.S economy, with threats of a recession. Global inflation has also significantly been on the rise, mainly fuelled by record high crude oil and food prices, which have defied all efforts by major economies to curb them.
Central Banks around the world have responded to this rising inflation through increases in interest rates; however Brice challenged the audience to consider the effectiveness of interest rates as a measure to control Botswana inflation, which is largely imported from our trading partners.
Giving the key note address, Eric Pascal, from Standard Chartered Bank's Risk Management Advisory team, emphasized the changing role of Directors and Boards, with risk management now becoming an important responsibility of Directors of companies.
He gave a brief outline of the process of putting in place a structure that adequately identifies, measures and manages key financial risks faced by corporations in these turbulent times.
Pascal highlighted the need to acknowledge and recognize these financial risks, with the aim of stabilizing earning streams. Financial risks, which arise as a 'by-product' during the execution of core business need to be reduced to acceptable levels.
The risks that Pascal identified as relevant to entities all over the world including the Botswana market include, but are not limited to, the following: market risk, which is the risk of volatility in foreign exchange rates, interest rates and commodity prices, which are all key inputs in the execution of core business, credit risk which may be caused by counterparty default, liquidity risk, which is the risk that the company working capital will not be able to meet commitments or payments as they fall due, and the risk inherent in operational processes.
He highlighted Standard Chartered Bank's capabilities in helping companies through the entire risk management process, and recommended hedging solutions to mitigate these risks.
Phole, The Chairman of the Botswana Institute of Directors commended Standard Chartered Bank for assisting the Institute in its efforts to sensitize local Directors on the changing landscape of governance, and restated the Institute's aim to work with nurture local companies to attain world class status in compliance and governance. The Head of Financial Markets, Olebile Makhupe, closed the seminar, reiterating Standard Chartered Bank's commitment to continue their efforts towards contributing to the economy of Botswana and development of the Financial Markets by offering world class, tailor-made solutions to its Wholesale Banking clients.
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Standard Chartered Bank is a recognized leader in the provision of end-to-end, award winning and innovative financial services, offering a range of financial hedging tools that can be customized to meet specific risk management needs of clients.
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