It’s not just the financial institutions that need to know about how to eschew risk factors. The common man must also learn the art ... or is it science?
THE financial sector is very much familiar with the term ‘risk management’. This has been an important area for financial institutions, made vital by Nick Leeson of England, who single-handedly brought down Bearing Bank in the 1990s. The State Bank of Pakistan (SBP) is also pressing hard on the issue and has also issued risk management guidelines fro different banks to bring them in line with international standards. Banks deal with different types of risks namely, credit risk, market risk, operation risk, liquidity risk, compliance risk and reputation risk. While these financial institutions have been kept preoccupied by these risks, ordinary people are exposed to many other risks which go beyond financial matters and can bring about ruination of more devastating kind. This is especially true for an under-developed country like Pakistan. While the government is keen on guiding banks how to manage risks, the same level of concern does not exists towards common citizens forcing independent bodies — like my body — to take the initiative of issuing the above titled guidelines.
The common man is exposed to many hazards and risk mitigation becomes important to enhance his life span. For example, a customer stepping out of a bank after withdrawing cash is at great risk of being robbed. The government should worry about that person also along with the bank. Of late, only lucky ones have reached homes safely. No government organization has come to their rescue by providing them tips, let alone publish guidelines. All these risks are highlighted below along with risk mitigants.
LIQUIDITY RISK: This has several types. One pertains to circumstance where a person is physically transformed from solid to liquid state. Common source of this risk is a bomb blast. This risk can be mitigated if you stay away from the convoys/public meetings of VVIPs where other than VVIP (since he is always in a bullet-proof car) everything else is liquefied in case of suicide bombing. While praying in mosques, make sure you have life insurance and there is no one with uneven physique in the rows closer to you.
Other liquidity risk originates when poisonous or toxic drinking water is supplied in localities which takes lives of ordinary citizens as happened in Hyderabad recently. Ailments through water-borne diseases are also part of liquidity risk. Perfect risk mitigation at present is not available. This can be countered to some extend if we boil water and hoped bacteria are not temperature resistant. Mineral water solution will be suggested separately when I start drafting risk management guidelines for the filthy rich.
Another dire form of liquidity risk is when water supply is completely disrupted in different areas. This results in the shortage of body fluids, especially in children and also unhygienic conditions all round. This can be confronted if we start stocking water in canisters during rainy seasons, which is the only source of water for some areas or wed our daughters to gentlemen associated with the tanker mafia.
OPERATION RISK: This risk arises when a poor is advised by a medical practitioner that he needs to be operated upon. Operation risk can lead to removal of wrong kidney, discovery of scissors/instruments inside the body after the operation, excessive dose of anaesthesia etc, leading to soul ejection. Mitigants: The patient must ensure giving substantial ‘tips’ to paramedics before the operation and promise for more after the operation, and make it clear to the surgeon that the kidney to be operated upon is on your right and not on his right. You can also issue pre-operation instructions to your wife’s fat brother to slap you incessantly in case you fail to wake up due to anaesthesia overdose.
MARKET RISK: This is the risk when a common man visits the market or mandi with the ‘basket of goods’ and finds that adverse market movement has devalued his currency and he can either buy chicken or egg in his basket of goods but not both. This ‘chicken and egg’ situation makes him wonder if he starts building his portfolio for future in eggs instead of prize bonds he might be better off. A safer bet will be stacking flour bags in your house. To counter market risk, please alter your shopping preferences by visiting large departmental stores where shoplifting is easy. There ‘out of basket transactions’ will enable you to meet your budget deficit.
VALUE AT RISK (VAR): This is a very advance concept internationally, but not for us. For the common man, his own self is the ‘value at risk’ since he seldom owns any other asset like house or a car. He needs to cross roads carefully and drink boiled water only since being the bread earner he has the highest intrinsic value.
FINANCIAL RISK: No government wants its citizens to be robbed. However, tolerance level varies. In our country, our government is very tolerant as per its own proclamation, hence, transfer of wealth regularly takes place at gunpoint. Mitigants: Citizens are advised not to keep their life long savings in the house but to spend them lavishly in shopping and vacation, not to mention charity. Those who want to save for their daughters’ weddings must keep them in banks but not in lockers where theft is common. Alternatively, they should become activists for campaign against jehez so that by the time their daughters grow up, they can marry them with other activists sons. Middle class people, who somehow manage to buy new cars, should develop the habit to travel in public transport since these days carjacking is rampant. Initially, it is tough but soon your body will not feel the aches and it will get used to compressions. You may even start looking leaner. While travelling on a bus, always carry no more than Rs100, avoid carrying mobile phone and ID etc in the wallet. Also give up hoping for the bus to stop, while disembarking because it never does. Bang it hard on the door, take the plunge and climb down and while in the process start jogging alongside the bus. However, if there is red light ahead, stop jogging because the policeman will catch you and not the bus. Before climbing down, please check if the road has not been dug out. Mapping the path beforehand through a long evening stroll is advised.
For those returning from the bank with cash must carry a bag with them. Do not worry, it will only be a decoy since you would keep the money in your shoes and under the vest. This will ensure that your loss remains limited to the bag while robber also earns initial satisfaction of doing a smart job.
REPUTATION RISK: This is a risk when a traffic policeman (later joined by a police constable) waves your bike to a halt and commands you and your wife to show the nikahnama. This can lead to a night behind bars for the couple which involves the reputation risk. This risk can be reduced if you are sensible enough to negotiate a deal with the policeman on the spot. Otherwise, before going out next time, search the place where you keep trash and where you are likely to find the sacred document. Keep its copy duly authenticated by the oath commissioner with your license at all times while travelling.
COMPLIANCE RISK: As mentioned, this is the risk you take when you stop at the instructions of a traffic cop. You usually pay a price. Here the VAR is your entire wallet. Mitigants: Ride on as if you are too preoccupied mentally thinking of your ailing wife to have noticed the hand of the cop.
These guidelines are published for the benefit of the general public and need to be adhered to in letter but not in spirit since we live in an Islamic republic. The idea is to make life of ordinary person less miserable and more enriching so that he or she may live longer and happier.
It’s not just the financial institutions that need to know about how to eschew risk factors. The common man must also learn the art ... or is it science? 
