paper presented to NBAA/BOT Conference on 27 may 2021 in Arusha Tanzania

1. Leadership, Governance &
The Role of Board in Managing
Crisis
Kassim Hussein, PhD
Email: kassimhussein2002@yahoo.com.
Mobile: +255 754 360 174
NBAA / BOT Joint Conference- May 2021

2. 1. Leadership…
2. The practice of examplary leadership
3. Mwalimu on Qualities of effective leadership
4. Corporate Governance: Linking leadership with persons
charged with governance (TCWG))
5. Crisis management as part of BCM
Key issues…
NBAA & BOT Joint Conference - May 2021 1

3. • Capacity to influence a person or group of people towards
the realization of a goal.
• Application of influencing skills to people to act towards
achieving a common goal. In a business setting, this can
mean to persuade workers and colleagues willingly to
implement a strategy to meet the company's needs.
• A leader inspires others to act while simultaneously directing
the way that they act.
Leadership is About: Influence, persuasion and inspiration
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4. Five practices of exemplary leadership
NBAA & BOT Joint Conference - May 2021
1. CHALLENGING THE PROCESS
2. INSPIRING A SHARED VISION
3.Enabling Others to Act
4. Modeling the way
5. Encouraging the heart
3

5. •Leaders search for opportunities
to change the status quo.
•Look for innovative way to
improve the organization
•They experiment and take risk
•Accept mistakes, failures and
disappointments.
1. Challenging the process
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6. • Leaders passionately
believe they can make
a difference
• They envision the
future.
• Create an ideal and
unique image of the
future.
• Through persuasion
they leaders enlist
others.
2. Inspiring a shared vision
NBAA & BOT Joint Conference - May 2021 5

7. • Leaders foster collaboration
and build spirited teams.
• They involve others
• Leaders understand that
mutual respect is what sustain
ordinary efforts.
• They strive to create an
atmosphere trust and human
dignity.
• They strengthen others
3. Enabling Others to Act
NBAA & BOT Joint Conference - May 2021 6

8. • Establish principles concerning the
way people (colleagues, staff
customers, etc) should be treated
and the way goals should be
pursued.
• Create standards of excellence and
then set examples for others to
follow.
• Work towards larger objectives.
• Unravel bureaucracy when it impedes
action
4. Modeling the way
NBAA & BOT Joint Conference - May 2021 7

9. • Accomplishes extraordinary
things in the organization
• Keep hope and determination
alive.
• Recognize contributions that
individuals make.
• Celebrate accomplishment
5. Encouraging the heart
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10. SKILLS
KNOWLEDGE
ATTITUDES
VALUES
MOTIVES
VISIBLE
HIDDEN
Leadership Attributes: The Iceberg Model
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11. Understand
themselves and
how their
behaviour
impacts others.
Leaders have to….
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12. Mwalimu on Requisite qualities of a leader

13. • The ability to think logically – lateral
thinking
• Capacity to express clearly –
communication skills (speaking,
listening, receiving feedback, giving
feedback,…. Writing )
• Technical competence of the job –
mastery
• To make informed decisions and taking
responsibility of the decisions -
Accountability
On Mwalimu: Hallmark of leader
NBAA & BOT Joint Conference - May 2021 9

14. Show attitude of sincerity and
desire to attend or assist others in
the problem or the pursuit of goals.
Leaders have to….
NBAA & BOT Joint Conference - May 2021 12

15. Empathise – able to "tune in" accurately
to the feelings and needs of others and
then treat people accordingly.
Leaders have to….
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16. Build relationships, building networks
and finding common ground in order to
minimize conflict and maximize rapport
Leaders have to….
NBAA & BOT Joint Conference - May 2021 14

17. Leadership and Corporate
Governance Framework :
Linking leadership with
persons charged with
governance

18. Crisis management
as part of BCM

19. • Leadership and management tend to be used interchangeably, but
they're not the same.
• Leadership requires traits that extend beyond management duties.
• Both leaders and managers have to manage the resources at their
disposal, but true leadership requires more.
• For example, managers may or may not be described as inspiring by
the people working under them, but a leader must inspire those who
follow them.
Leadership Vs. Management differentiation

20. •King lV defines CG as the exercise of ethical and
effective leadership by the governing body
(Board of Directors) towards achievement of
governance outcomes :
 Ethical Culture
 Good performance
 effective control
 legitimacy
Revisit: ethical based CG perspective

21. Leadership Management
May or may not be a manager May or may not be a leader
Must inspire followers May or may not inspire those under them
Emphasizes innovation Emphasizes rationality and control
May be unconcerned with preserving
existing structures
Seeks to work within and preserve
existing corporate structures
Typically operates with relative
independence
Typically a link in the corporate chain of
command
May be less concerned with
interpersonal issues
May be more concerned with
interpersonal issues

22. •leaders emphasize innovation ,
change adaptability, risk-taking
….
•Right Traits of : Cool-headed,
visionary, courage
•Personal attributes: Integrity,
Trust, Communication
•Social skills:
Leverage

23. •Crisis is a sudden and unexpected situation/event
leading to a business disruption and loss.
•Leadership in financial institutions need to embrace
crisis as embedded in the Business Continuity
Management. BOT Guidelines of 2009 are very clear
and consistent International standards
Situational leadership – managing crisis
NBAA & BOT Joint Conference - May 2021 15

24. • Crisis management is the process by which an organization deals
with a disruptive and unexpected event that threatens to harm the
organization or its stakeholders.
• Three Elements are common to a crisis:
(a) a threat to the organization,
(b) the element of surprise, and
(c) a short decision time.
• The need for change – lessons learn (Often)
Situational leadership – managing crisis
NBAA & BOT Joint Conference - May 2021 15

25. Example of Unsuccessful crisis management
NBAA & BOT Joint Conference - May 2021 15
Crisis is a sudden and unexpected
situation/event leading to a business
disruption and loss.
Leadership in financial institutions need
to embrace crisis as embedded in the
Business Continuity Management. BOT
Guidelines of 2009 are very clear and
consistent International standards
Situational Leadership – Managing a crisis
situation

26. • Crisis is a sudden and unexpected situation/event
leading to a business disruption and loss.
• Leadership in financial institutions need to embrace
crisis as embedded in the Business Continuity
Management (BCM).
• BOT Guidelines of 2009 are very clear and consistent
International standards
Situational leadership – managing crisis
(should part of BCM)

27. Board’s Role in Risk : Strategy Policies,
Standards…
•Follow standards for example….those that
may conform to IRM Standard, British
Standard BS 31100; American COSO ERM
framework or ISO 31000

28. •Business continuity management about planning in
advance and preparation of an organization to
maintaining business functions or quickly resuming after
a disaster has occurred.
•It also involves defining potential risks including fire,
flood or cyber attacks.
•The Board approves a plan to identify and address
potential crises before they happen. Then testing those
procedures to ensure that they work, and periodically
review them (stress testing) to see if they work and take
measures to update them accordingly
The role of the Board in BCM (and crisis management)

29. Refers to an institution-
wide approach that
include policies, standards
and procedures for
ensuring that specific
provisions can be
maintained or recovered
in a timely fashion in the
event of disruption. Its
purpose is to minimize the
operations, financial, legal,
reputational and other
material consequences
arising from disruption.
https://www.bot.go.tz/Publications/Acts,%20Regulations,%20Circulars,%20Guidelines/Guidelines/en/2020091513050
578.pdf

30. BOT Guideline… emphasis (2. 2) on TCWG
• Board of Directors and Senior Management are responsible
for the organization’s business continuity.
• The responsibility for business continuity management of an
institution ultimately lies with the Board of Directors.
• Specific responsibilities of the Board include: approving
business continuity management policies, standards and
principles developed by Senior Management and ensuring
compliance with regulatory and legal requirements for
Business Continuity Management.

31. • In banking, when one risk or loss event, trickle another and loss event
say, in one bank affect another or other bank… the domino effect is
what is referd to as contagion.
• A controversial issue in the literature on banking regulation is
whether there is contagion risk, or not. A research by Dirk
Schoenmaker* derives a framework to test for contagion risk and
applies it to a data set of monthly bank failures under the US National
Banking System from 1880 till 1936 and the results indicate that there
is contagion risk in banking.
Contagion

32. • Strong financial contagion was one of the key features of the global
financial crisis as localised problems in certain segments of financial
markets rapidly morphed into a crisis of global dimensions. (airline,
tourism and hotels are good example)
• Financial contagion shocks dramatically increase countries' risk of suffering
a financial crisis: in periods where a country is not affected by financial
contagion, its annual crisis probability is slightly above 1%, but rises to
more than 28% in periods when it is hit by a strong contagion shock. Why?
• Balance sheets of financial intermediaries are vectors of cross-border
contagion
• 2. Financial instability can spread across countries via balance sheets of
financial intermediaries.
Global financial crisis…. And its impact to Tanzania economy

33. Crisis management and bank resolution represent an interesting area
where regulators reserved some room for a public-private
collaborative form of regulation.
This study advances a new features of “living wills” regulation in the
light of the “new governance” theory.
https://www.degruyter.com/document/doi/10.1515/ecfr-2018-
0024/html
In so doing, it emphasizes the advantages of a dynamic cooperation
between public (governments, regulators) and private (regulated)
parties in overcoming looming market failures such as informational
asymmetries and moral hazard
Andrea Minto research
on crisis management and governance

34. • Tanzania responded with some economic
measures through the Bank of Tanzania with
various policies to ease liquidity and safeguard the
stability of the financial sector.
• BOT reduced the discount rate, lowered the
minimum reserve requirement ratio, incentivised
the restructuring of loans for severally affected
borrowers, and relaxed limits on mobile money
users.
• The measure entails increasing the daily
transaction limits by 2,000 Tanzanian Shillings
(TShs) and daily balance by 5,000 TShs for all
mobile money platforms, to encourage non-cash
payments, and reduce gatherings in banks and
mobile money kiosks.
BOT applied this in the form of Covid-19 relief programme

35. • Boards aligned to BOT policies an
directives
• Board of directors reviewed their polies
and approved management actions for
example: Banks responded and the releif
programme helped bank borrowers to
sustain many businesses and bring them
on the track.
• Board had increased oversight on credit
and other control enviroemnt mesures to
manage Covid shocks and subsequent
waves.
Boards on Covid-19 relief programme

36. • The present framework will apply to the risk of small-
scale and large-scale, frequent and infrequent, sudden
and slow-onset disasters, caused by natural or
manmade hazards as well as related environmental,
technological and biological hazards and risks. It aims
to guide the multi-hazard management of disaster risk
in development at all levels as well as within and
across all sectors
Sendai and Hyogo
n

37. • The Sendai Framework works hand in hand with the other 2030
Agenda agreements, including The Paris Agreement on Climate
Change, The Addis Ababa Action Agenda on Financing for
Development, the New Urban Agenda, and ultimately the Sustainable
Development Goals.
It was endorsed by the UN General Assembly following the 2015 Third
UN World Conference on Disaster Risk Reduction (WCDRR), and
advocates for:
Sendai and Hyogo
n

38. • The substantial reduction of disaster risk and losses in lives, livelihoods
and health and in the economic, physical, social, cultural and
environmental assets of persons, businesses, communities and
countries.
• The Sendai Framework for Disaster Risk Reduction 2015 – 2030
emphasises the need to manage risk rather than disasters, a theme
already present in its predecessors, the Yokohama Strategy and the
Hyogo Framework for Disaster Risk Reduction.
• https://reliefweb.int/report/united-republic-tanzania/disaster-risk-
profile-tanzania-building-disaster-resilience-natural
Sendai and Hyogo
n

39. • Disasters are on the rise, both in terms of frequency and magnitude.
• From 2005-2015, more than 700 thousand people worldwide have
lost their lives due to disasters that have affected over 1.5 billion
people, with women, children and people in vulnerable situations
disproportionately affected.
• The total economic loss was more than US$ 1.3 trillion.
• Disasters inordinately affect lower-income countries. Sub-Saharan
Africa, where two-thirds of the world’s vulnerable population lives.
Sendai and Hyogo
Manage risk rather than disaster or crisis event: Why?

40. Drivers: (1) Floods in urban area
• African cities are among the fastest growing globally. Mass migration
and the resultant urban sprawl have created cities that are vulnerable
to the impacts of climate change is flooding
https://reliefweb.int/report/united-republic-tanzania/flooding-east-
africa-impacts-and-implications-cities-east-africa
• Growing populations, a lack of infrastructure and limited vegetation
leads to increased flood risk.
The destruction and harm caused by flooding is a crisis to be managed. The cost of
such flooding grows ever year and the effects are felt by all citizens to varying
degrees. (Vulnerable populations are particularly at risk, as their homes are often built on available land in
flood plains and they have limited financial resources to recover from disasters)
•

41. • Food deficits, price increases and increased food insecurity in
many parts of southern Africa.
• Where more than 11 million people in nine southern African
countries are now experiencing crisis or emergency levels of
food.
• While Angola, Madagascar, Mozambique, Zambia and
Zimbabwe are facing the worst of the impacts of the
drought, Eswatini, Lesotho, Malawi and Namibia have also
seen increases in food insecurity and lack of access to clean
water and a rise in communicable disease outbreaks linked to
the climate crisis.
• https://reliefweb.int/report/united-republic-tanzania/unicef-
regional-multi-country-humanitarian-situation-report-july
Drivers : (2) Food, water and deseases

42. Driver (3) ICT exposure
•Threats/ events that could cause harm to the confidentiality,
integrity, or availability of information or information
systems.
•exploiting a vulnerability to cause harm through the
unauthorized disclosure, misuse, alteration, or destruction
of information or information systems.
• internal (malicious or incompetent employees, contractors,
service providers, and former insiders)
•external (criminals, recreational hackers, competitors, and
terrorists).

43. ICT threats and vulnerabilities
•vulnerabilities - weaknesses in a system,
or control gaps that, if exploited, could
result in the unauthorized disclosure,
misuse, alteration, or destruction of
information or information systems.
•vulnerabilities are generally grouped into
two types: known and expected.

44. Driver 3: ICT: Cyber attacks as source of crisis
•Cyber attacks present
unprecedented challenges
to 21st century enterprises
because of the speed of
occurrence and severity of
damage, along with the
enterprise’s vulnerability
to keep up with the
evolving complexity and
volume of cyber threats
https://purplesec.us/resources/cyber-security-statistics/

45. More drivers
Tanzania Banks…. Deal with
•Going concern risks, businesses
closing
• Reputational Risks,
•Tax risks
•Operational risk
•Regulations and regulatory costs

46. Conclusions
•Leadrship is about infliuencing people to
achieve objectives. To pursued and motivate
them to achieve extraordianry outcome and
whre sucessful leaders live by example,
thinking logically, communicate
clearly,mastery of their job and are
responsible for their decisions.

47. Conclusions
•They practice good corporate
governanace and its is their resposibility
to have foresight on what may happe
and its impact on possible events as part
of the buiness continutity management .

48. Conclusions
• Much as they have to be risk takers but also should
manage risk including taking cognisance of key risk
drivers.
• Managing risk is a better approach than managing
crisis. Managing risks is managing a crisis before it
happens.

49. Thank You
Discussions … Q and A
Contact:
kasimhussein2002@yahoo.com
•Cell 254 360 174