Uncertainty breeds caution
All in all, that first piece of the year was meant to encourage you to stay on course with your plans, but also mindful of the possible gaps that could derail them. In fact, the story is not difficult to tell because we live in a world where nothing is certain- absolutely nothing.
For this reason, and given the heightened uncertainty in this era due to the onset of the COVID-19 pandemic, l think the best way for us all to stay motivated and committed to fulfilling our dreams in life is to continue to monitor the world around us, take note of the signals and, most importantly, be ready to adopt the necessary changes where necessary.
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So, since this month is the first of the year, the plan is to listen to what the experts are saying about the global economy this year (underpinned by the COVID effect), analyse their forecasts against what we expect to see in our personal lives, and assess whether we will be off the mark sticking to our plans, which was based on past information, and where there are gaps, look at the possible ways of closing those gaps.
Understandably, this year, most countries are focused on boosting their domestic economies, albeit with modest recovery expected, given the uncertainties surrounding the future growth path as the negative COVID effects linger on.
The mounting concern about risk build-up, according to market watchers and observers, should see a much focused attention on financial stability issues. What this means is that risk, which has always pervaded finance, will continue its dominant effect, influencing government decisions in determining the outlook and policy response going forward.
As explained in the December 12, 2020 edition of this column, the COVID-19 pandemic has brought to the fore the importance of dealing with risk in all spheres of life.
With the pandemic, and as we have had various risks- health and financial- to deal with as a result, there is the need for thorough risk assessment before you can make meaningful headway as you journey along this year. In fact, COVID-19 has taught me, personally, how important risk mitigating structures in life are, and why they should never be taken for granted.
l have been more confused about COVID than any other distressing situation that l have ever experienced. And this has forced me to have several reflective pieces written on the situation any time this dynamic situation changes . I am sure the material will serve as a good resource in the future.
Look at it this way: we have always known about financial and health risks, yet, no one was able to predict that it will come to the point where in the left hand, will be a toolbox to deal with a ravaging virus as a health issue, and in the right hand, the kit to plug the financial leakage because of the virus.
It is for this reason that governments and policymakers all over the world have taken tactical steps to lessen the financial and macro-economic impact of COVID-19. Businesses have also responded in a strategic way, with some going further to develop other structural changes, focusing on sustaining operations, so as to survive within these uncertain times.
This is where, as l said in the referenced edition of December 12, 2020, your response to the phenomenon, as an individual, is equally important because if you lose sight of the impact on your own financial health, you will lose track of your path.
Truth is, on the whole, we aren’t very good at assessing risk. Oftentimes, we assess risk not in terms of probabilities but in terms of whether we can imagine an event actually occurring in our life. For instance, how many would have taken an insurance policy against the occurrence of COVID-19 in 2020, if indeed it had been predicted last year?
Of course, there are some insurance policies today that would have provided cover for some of the unfortunate victims of the pandemic, but generally, we are poor at taking the mitigating steps to address risks as a people. Your personal attitude (disposition to risk) plays a part in your interpretation of risk tables of probabilities.
It cannot and should not be “business as usual” this year. This is the time to recalibrate. Certainly when you made your new year resolutions at the start of 2020 the unusual developments in the course of the year had not crystallised, therefore, would not have been captured in your scenario building.
With the benefit of hindsight, this is the time to recalibrate – pause, reflect and change course if you want 2021 to be different from last year.
At this point, and given what you know “post-resolution”, consider whether your resolutions or plans for the year are still pragmatic, measurable, achievable, and above all within the set timelines. In fact, will you still be able to ensure that you are self-disciplined in your approach to enhance efficiency in delivery of your plans this year? Does the plan adequately provide for heightened negative external factors?
Remember that you can set out any plan that you want, no doubt, but you will not achieve anything if the plan is not able to help you develop solutions or overcome a problem. This is the time to relook at the intermediate goals that you set to guide your achievement of the bigger goal.
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