On the 10th of March in Islamabad, Mari Petroleum Company Limited (MPCL) organized a conference to launch the Institute of Risk Management’s (IRM) Regional Group, where President Dr. Arif-ur-Rahman Alvi was invited as the Chief Guest and Chairman SECP, Aamir Khan, as the keynote speaker.
The IRM Pakistan Regional Group is the first formal risk management group at a national level in Pakistan. The group aims to encourage adoption of structured risk management processes and practices within Pakistani organizations, with IRM supporting the group in providing knowledge and professional development to its members via training and qualifications, events and networking.
Group Chair, Sohab Mushtaq, IRM Cert, Head of ERM at Mari Petroleum welcomed guests to the launch and Lt Gen (r) Ishfaq Nadeem Ahmad, MD Mari Petroleum spoke about the importance of risk management and how it aids in both protecting and creating value.
The next speaker is Sohab Mushtaq, Head of Enterprise Risk Management at Mari Petroleum Company, sharing with us her Personal Journey : Gaining Buy-In and Driving Change. Her story is one of dedication, perseverance, #resilience and the importance of Male Allies. #ewRiskForum pic.twitter.com/bG6yke93mh
— everywoman (@everywomanUK) November 26, 2019
Speaking to the attendees, Dr. Arif Alvi stressed the need for collaborative efforts to deal with common challenges and threats including global warming, viruses and religious as well as national conflicts. He added that ensuring good governance standards is the cornerstone of the success of states, and is at the heart of our government’s fight against corruption and the aim of social uplift.
The President then explained that governance is concerned with the need for openness, integrity, transparency and accountability in actions and decision making, and it is relevant to all organizations regardless of size or whether they operate in the public or private sector. Referring to the collapse of a building in Karachi, which claimed 27 lives, the President stressed that they should be concerned to build more secure structures.
— The President of Pakistan (@PresOfPakistan) March 10, 2020
Also attending the First National Risk Management conference as the keynote speaker, Chairman, Securities and Exchange Commission of Pakistan (SECP), Aamir Khan on Tuesday said that risk taking was an essential ingredient of success, but a compromise on risk management protocols, could turn an opportunity into a loss situation.
“No amount of urgency should detract from following the risk management protocols,” he added. The SECP Chairman then proceeded to explain how risk management controls also safeguard against non-market related losses such as misappropriation and fraud – essentially any form of losses or damages that we can incur.
He also pointed out that international fame companies, i.e., Kodak, Nokia and Xerox were once industry leaders, but their inability to take risks and try new ideas ended their supremacy, rather unceremoniously. ‘Taking calculated risk differentiates leaders from laggards. Risk-taking is by no means a blind leap into darkness, but a careful calculation of the potential outcomes and putting “what-if” strategies in place, Khan advises companies’, Aamir stated.
Taking calculated risk differentiates leaders from laggards. Risk-taking is by no means a blind leap into darkness, but a careful calculation of the potential outcomes and putting “what-if” strategies in place
While talking about innovation, Aamir mentioned that technology-driven companies like Tesla, Uber, Google, and Amazon re-writing history of corporate success. In all these companies, Risk-taking was at the cornerstone of their business strategy, he added and said that these companies refused to follow conventional strategies, and put into play ‘out-of-box’ thinking.
While private-sector history is replete with success stories arising out of risk-taking, Aamir pointed that in the domain of public sector companies that we see limited-to-no appetite. This is primarily due to their peculiar work culture, where people prefer to follow the laid down procedures, while getting support for a new idea is always an uphill task. A well-designed risk management process should evaluate, control and monitor all risks to which an organization may be exposed.
In this regard, he mentioned SECP administered Public Sector Companies (Corporate Governance) Rules, 2013 that require Board of Directors to determine the level of risk tolerance by establishing risk management policies, as well as Risk Management Committees.
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He said that the existence of an Enterprise Risk Management (ERM) framework sends strong signals to the market, and helps improve investor confidence in the company’s management. International investors in particular, assess how companies have taken appropriate measures to improve their risk management governance systems.
In the digital age, he said, organizations face emerging risks that have traditionally not received a lot of focus. The use of online data requires risk managers to pay close attention to the ever-changing business models. With the advent of technologies like Artificial Intelligence, Machine Learning and Internet of Things (IoT), machines are able to share and analyze data without human intervention. Such digital footprint, undoubtedly provides a competitive edge, but at the same time raises concerns with respect to data security.
Hence, to counter risks related to digitalization, it is paramount to create broad-organizational awareness and to implement risk-based architecture for the employees, vendors, customers as well as other stakeholders. Accordingly, organizations should remain vigilant with regards to the use and impact of technological developments, SECP chairman added.
On the occasion, Managing Director MPCL also shared that in 2018, MPCL initiated an Enterprise Risk Management Programme across the company to develop and provide an approach for the implementation of ERM practices based on the risk management standard, ISO 31000. The Company initiated adoption of enhanced Enterprise Risk Management practices to manage its risks and achieved this successfully.
The President congratulated Mari Petroleum on this great initiative and commended them for recognizing the vacuum that was present in Pakistan when it came to proponents of formal risk management and leadership, and for stepping up and taking the lead on this matter.
In simple words, risk management is the process of identifying, assessing and controlling threats to an organization’s capital and earnings, followed by coordinated and economical application of resources to minimize, monitor, and control the probability or impact of unfortunate events. We congratulate MPCL for taking initiative and being the first corporation to promote the concept in Pakistan!