South African businesses are often lauded for their resilience in the face of crises, but our seemingly constant state of managing in survival mode holds the danger of losing sight of longer-term objectives and opportunities for growth.
In the past five years we have weathered not only global crises impacting on business operations and viability – from the Covid-19 pandemic to extreme weather events in distant countries impacting worldwide supply chains, to the current US tariff hikes upending the global trading system (the latter certainly not yet weathered) – but also disruptive events locally, notably the 2021 riots in KZN and Gauteng, and the extreme flooding in Durban in April 2022.
In addition, South African businesses have to keep finding ways to adapt and survive in a highly uncertain operating environment of political instability, uncoordinated and dense bureaucracy, crumbling infrastructure, logistics inefficiencies, municipal service delivery failure, and rising crime and corruption; along with a policy environment that is often ambiguous, lagging behind or unsupportive of the current needs of industry and investors.
Dealing with this excessive load of uncertainty and risk has made us very capable of operating in a crisis and surviving, but the problem is that this has also put local business on an insular and defensive path with too much short-term focus – in fixating on avoiding potholes, we are not thinking about how best to get to the end destination, so to speak.
Add to that an increasing regulatory burden of compliance requirements that meet, or exceed, those of first world countries, across the spectrum of environmental, social and governance (ESG), health and safety, employment and labour, financial reporting and disclosures, customer verification, personal data protection, access to information, as well as Broad-Based Economic Empowerment (B-BBEE).
The result is that local businesses find themselves having to operate to first world standards in a third world environment, and resources that should be going into driving innovation and growth are going into ticking compliance boxes. In some instances, local businesses are even going beyond some of the standards which first world countries hold themselves to.
It’s cold comfort that although we’ve had more than our fair share of crises, and live with more than our fair share of risks and regulatory headaches, South African business is not alone in rising levels of risk-aversion that are holding back the calculated risk-taking that is needed to innovate, grow and stay competitive.
According to the 2025 Global Risk Landscape report by international accounting and business advisory firm BDO, which surveyed 500 senior executives in large companies (over 500 employees, at least US$100 million annual revenue) across a range of industries and countries, a global state of “permacrisis” is making companies excessively cautious.
Businesses are caught between the fear of risk and knowing that in risk lies opportunity.
A record 84% of CEOs and senior executives agreed that the global business risk landscape is defined by crisis, now more than ever; but at the same time, those who say their company’s approach to risk management is “very proactive” has plummeted from 29% to just 7% in the last two years.
As an indicator of caution over taking risks to embrace opportunities for growth, the percentage of companies that are risk-averse or actively risk-minimising rose sharply to 69% in 2025, compared to 61% last year.
Although a timid “wait and see” approach is understandable, the reality is that we are operating in an environment of constant change and new risks. In order not to stagnate, business cannot wait for the turbulence to subside before making decisions – we need to accept it and plan for it.
For South African business, a survivalist focus over offensive strategy has led to us being overtaken by global competitors not facing the same level of uncertainty as we do.
As a means of managing risk, compliance needs to move beyond box-ticking and be seen as a business tool – it should be the minimum of what we do, not the extent of what we do.
Compliance has become an expensive exercise, and if high levels of compliance are not going to gain new business then that cost becomes a hindrance rather than an enabler of growth.
A solution lies in integrating compliance and risk management functions, and more closely linking risk management strategies to growth-focused business strategies so that compliance becomes a tool towards achieving targets and business goals.
Rather than seeing compliance to first world standards as a hindrance, or something to just tick boxes on, we can leverage this as a competitive advantage in global markets.
Rather than being box-ticking exercises, South Africa’s robust financial and governance regulations provide confidence and transparency for investors; our stringent environmental legislation and active commitments of local business to corporate social responsibility meet the ethical concerns of first world consumers.
The message is not to disregard the rules nor to take risks blindly, but to move from being defensive to being proactive – evaluate opportunities against business strategy, think through scenarios of what could go wrong, and weigh up the costs and risks of taking an opportunity versus not taking it.
Decide if you can afford the worst case, and then plan for it. At the same time we must keep innovation at the forefront of what we do, if we are to have any chance of navigating and leapfrogging through the current challenging environment to a reinvented local economic future.
Running away from risk can also mean running away from opportunity to grow.
Kelvin Naidoo is Manufacturing and Technical Director of Auto-X, President of the Nelson Mandela Bay Business Chamber and Lead of the Chamber’s Local Economy Reinvention Think Tank.