Business

The Legislation Is New And Untested

What will be the risks that South African companies and their boards should be factoring into their planning 2012? Year Last, it seemed as though we may be developing the recession, but now the chat is focused on the dreaded double dip. Economic hardship is exacerbating political and social tensions, especially as retrenchments swell the hordes of unemployed. Way too many people without work or the prospect from it places an enormous burden on the continuing state, supplies the climate for crime, and is likely to fuel tension between the haves and the have-nots.

Ongoing service delivery and problem issues have continued to fuel popular, sociable unrest. Some commentators are even talking about popular uprisings much like those that occurred earlier in the entire year in North Africa. Instability in the ruling party is constantly on the unsettle sociable and political life, and this is only going to worsen as the ANC’s leadership conference approaches. Meanwhile – without doubt fueled partly by the economic problems mentioned previously – attacks and public protests appear to be getting ultimately more prevalent. For business, one immediate consequence is regular work stoppages, with personnel finding it hard to get to their places of work actually.

“It seems that South Africa is coming to a crossroads again, faced with the choice between your low and high roads,” says Michael Davies, ContinuitySA’s managing director. While Eskom contrived to come through a very chilly winter with relatively few blackouts, concern remains high as summer months is the right time for prepared maintenance. Another concern is the availability of skills to keep the aging infrastructure at Koeberg and to operate planned new nuclear power facilities. For the positive part, recent techniques to introduce independent power generation and green power into the South African energy market are pleasant.

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That said, there are worrying reviews that lack of additional energy capacity at present is affecting the power of some data centers to expand. Other infrastructural difficulties include the new toll streets around Gauteng and the new nationwide health insurance system. While both are appealing, they are placing additional financial burdens on the center class-i.e. Is the middle class coming to feeling as squeezed as the poor and unemployed and close, if so, how will it make its distress known? Water security remains a problem in this nationwide country, exacerbated by the pollution of our existing water stocks.

Although the government finally woke up to the issue of acid mine drainage and made R400 million available, mass media reports indicate that little action has actually occurred. If substantial progress is not made in finding a solution, the acid water is expected to begin decanting into the Johannesburg basin in March 2012-it has already been decanting on the West Rand. Companies with IT equipment in basements need to stay on high alert.

The risks talked about elsewhere will continue to weigh on risk-averse international investors, as the volatility of the rand shall encourage destabilizing capital motions. The socio-political challenges we’ve mentioned are also taking their toll on the outlook of local business. With the business confidence index declining, investment in equipment and folks will be curtailed at the right time when these are more necessary than ever.

Militant unions and needs for raises that are significantly above inflation are further worsening the business outlook. With income under pressure, many companies will be enticed to skimp on business continuity, but this process is short-sighted. Promulgated during 2011, the new Companies Action has made the directors of companies liable for the outcome of their decisions personally.

The legislation is new and untested, making compliance even more risky than it could have been usually. In combination with the suggestions of the King Commission, the new act has made risk management a more important item on the board agenda-and this includes IT risk. Boards are progressively responsible to all stakeholders rather than simply shareholders. In this regard, environmental issues have become more prominent, which may add impetus to the move towards cloud computing, which has the effect of greening the IT department.

Recent natural disasters like the volcanic eruption in Iceland and the earthquake and tsunami in Japan have emphasized the flipside of global interconnectedness. To be able to ensure business continuity, companies must consider their whole supply chains progressively. Adequate consulting around the business continuity threats originating beyond the business is imperative. As predicted, 2011 saw considerable movement in cloud computing.