Navigating Enterprise Risks in Nepal Post-COVID: Identifying Challenges and Shaping Strategies
The pandemic has exposed new business risks, and some are here to stay.
The landscape of business has been dramatically transformed by the unprecedented events of the past two years. The global pandemic, COVID-19, has not only shaken the foundation of traditional business models but has also exposed a new realm of risks that demand meticulous attention. In Nepal, as in the rest of the world, the aftermath of COVID-19 has compelled both business leaders and operators to reevaluate and fortify their risk management strategies.
The pandemic acted as an unforgiving litmus test for businesses, unveiling vulnerabilities that were previously overlooked. It has become evident that some of these risks are here to stay, reshaping the way organizations perceive and manage risks. According to Joseph Adhikari, Cofounder of Sampanna Capital, “Many leaders found that they had some gaps. They didn’t understand how a multi-dimensional event could impact their organizations in so many direct and indirect ways. Now, they’re seeking ways to better identify, assess, and manage risks.”
In Nepal, a nation characterized by its resilient and resourceful spirit, the echoes of these lessons resonate deeply. The emergence of new and unforeseen risks has prompted a significant shift in the priorities of both boards and operators. The traditional approach to risk management, which often focused on well-known and anticipated challenges, has given way to a more comprehensive and proactive perspective.
One of the pivotal realizations post-COVID is the need for agility and adaptability in risk management strategies. The pandemic demonstrated the vulnerability of linear and inflexible risk frameworks. Businesses now understand the value of creating dynamic risk models capable of accommodating a spectrum of potential scenarios. This adaptability allows organizations to respond promptly and effectively to ever-evolving risks, ensuring continuity even in the face of uncertainty.
In a landscape reshaped by COVID-19, supply chain disruptions, remote working challenges, and cybersecurity threats have risen to prominence as significant risks. These challenges, which were exacerbated during the pandemic, have led businesses to reassess their risk mitigation strategies. As remote work becomes an integral aspect of the modern business environment, ensuring data security and maintaining seamless operations have become paramount.
Furthermore, the emphasis on environmental, social, and governance (ESG) factors has gained momentum in the post-pandemic world. Businesses are increasingly recognizing the significance of ethical and sustainable practices as a means to mitigate risks, enhance resilience, and foster long-term growth. This holistic approach to risk management involves not only safeguarding financial stability but also addressing social and environmental vulnerabilities.
However, amidst these efforts to rebuild and adapt, another challenge has emerged for Nepalese businesses: the soaring interest rates. Investors find themselves in a situation where the central bank’s policies appear to be inadequate in safeguarding their interests. Many investors who took loans at a modest interest rate of 9 percent now find themselves burdened with interest rates of 15 percent or more. This sharp increase is perceived as unjust, especially given the lack of a clear rescue roadmap, stimulus for defaulters, and effective hedge mechanisms from the Nepal Rastra Bank.
The current approach of controlling the balance of payments by restricting imports is seen as a short-term measure that might not ensure the long-term viability of businesses. The absence of comprehensive measures to address the concerns of investors and defaulters raises questions about the sustainability of the business environment.
As Nepal’s businesses rebuild and evolve, a proactive and adaptive approach to risk management will be pivotal. The lessons from the pandemic and the challenges posed by policy limitations underscore the importance of anticipating and preparing for a diverse range of risks. Nepal’s business landscape stands at a crossroads, where strategic decisions and collaboration between the private sector and regulatory authorities will determine the path to a more resilient and robust economic future. With leaders advocating for comprehensive risk management practices, Nepal’s businesses can navigate the uncertainties ahead with greater confidence and resilience.
