Tankiso Moloi

The author examines the manner in which risk is governed within higher education institutions (HEIs) in South Africa by formulating risk governance statements based on the requirements of the King III Report on Corporate Governance and other relevant literature. The formulated risk governance statements are used to develop the risk disclosure measurement index. Disclosure measurement method is accepted as a flexible method to use when extracting the pre-determined information in the annual reports.
The developed risk disclosure index is used to extract the information from South Africa’s higher education institutions’ annual reports. The information disclosed in these annual reports is deemed a proxy of risk management practices within the higher education institution concerned. The results obtained indicate that South Africa’s higher education institutions have not embraced risk management as a key process in their activities. This is apparent in the assessed annual reports as compliance with the pre-determined set of statements was around 50%. For those that have not demonstrated these practices, it is stated that the concern is around the manner in which their highest decision makers make decisions, as it appears that risks may not necessarily be taken into account. As higher education institutions in South Africa continues to face challenges and they would possible be revising their strategies to take into account the recent events, every strategic decision being undertaken should be accompanied by a proper risk assessment to identify potential pitfalls (threats) and/or take advantage to achieve results promptly (opportunities)

This paper examines the manner in which risk is governed in certain selected sectors of the South African economy. To extract the statement deemed as a proxy of risk management practices in the certain selected South African organizations, the disclosure risk measurement instrument was developed. This instrument was used as a gauging tool for the information disclosed in the integrated/annual report. Risk practices statements were formulated using the governance of risk chapter of the King III Report on Corporate Governance, applicable to all organization regardless of manner or form of incorporation and the Public Sector Risk Management Standards, applicable to South Africa’s public service organizations.
The results obtained indicated a high level of risk management practices by the JSE listed companies. This could be attributed to the fact that the King Code has been incorporated as part of the JSE listings requirements. This paper further theorized that the high level practices in JSE listed companies could be attributable to the high level of scrutiny by shareholders in companies where they have vested interest. With regards to the National Government Departments and the South Africa’s higher education institutions, a lot of work still has to be done to embed key risk practices in these respective organization’s internal processes.

Keywords: Higher Education Institutions (HEIs), Enterprise Risk Management (ERM), Johannesburg Securities Exchange (JSE), National Government Departments (NGDs), Risk Disclosure Index (RDI).
JEL Classification: M4

This paper used the Credit Risk Disclosure Measurement Tool (CRDMT) constructed on the basis of six main areas, namely, banks own description of credit risk (i.e., as it applies to the banks operations), banks strategy of reducing credit risk exposure (i.e., objectives of credit management), banks approach to credit modelling or the internal rating system, banks approach and the manner in which they assess their exposure to credit risk, banks credit risk mitigation strategies employed (i.e., collateral and other credit enhancements), and banks approach to the valuation of pledged collateral and other credit enhancements to assess the information disclosed on the risk and capital management reports of the top-5 South African banks.
Results demonstrated that the top-5 South African banks were fairly in line with the main six credit risk areas that would result in an informative risk and capital management report, as proposed by the CRMDT. It was observed that there were, however, pockets of information that could be improved to enhance these risk and capital management reports, particularly the credit risk information made available to public. These areas included the information relating to banks credit risk mitigation strategies employed and banks strategy of reducing credit risk exposure, as well as the information relating to banks approach to the valuation of pledged collateral and other credit enhancements. These areas were noted for their partial or non-disclosure of information.

Keywords: banks, credit risk, Credit Risk Disclosure Measurement Tool (CRDMT), disclosure analysis and risk and capital reports.
JEL Classification: G21, G32