Welcome to Matters of Mind 

In the spirit of being open to new ideas and arguments I would like to quote from Farnam Street Blog no 512 on 19 Feb titled “The human mind has a shut off device”. In it, Shane Parrish concludes:

Once a belief is formed, the mind tends to stick to it, making it difficult to accept new ideas. Even the most intelligent people can be trapped by their previous conclusions, so it’s important to stay open-minded and avoid being influenced solely by popular opinion.

The trick, if there is one, is to form working beliefs, not permanent beliefs.

This blog is definitely worth its three- minute read tying in with our selected paper of the week “Can we embrace a circular economy?” (15 min read from The Actuary)

This week we have a focus on SA’s “greylisting”, perspectives on the future of insurance and some interesting and accessible articles on investing, cyber security, AA and climate change.  You’ll also pick up a few new words along the way - unless you knew them already!

Finally, don’t forget about yourself and read the articles in the “About YOU”, category.

Enjoy!

International and local economic and geopolitical news 

It’s official — South Africa fails to avoid greylisting

The move constitutes a blow to SA’s international financial standing around the world, and the Reserve Bank has warned that greylisting could have wide-reaching consequences for SA’s financial system.

Although the bank has warned of capital and currency outflows, the more immediate problem is that it increases transactional, administrative and funding costs for the banking sector. 

3 min read.

How is grey-listing likely to affect south africa?

The Financial Action Task Force (FATF) has given the country until the end of January 2025 to fix eight strategic deficiencies related to the implementation of its anti-money laundering/combating the financing of terrorism (AML/CFT) laws. This is after the FATF announced on Friday afternoon that it had added South Africa to its grey list.

Of the 24 grey-listed countries, only South Africa and Turkey are full members of the organisation.

This is a valuable read giving some background and perspectives on impact on the economy and financial services. 4 min read.

Explainer: How did South Africa end up on the grey list?

The Financial Action Task Force (FATF) is an intergovernmental organisation that was established in 1989 to combat money laundering and the financing of terrorism.

The FATF was founded by the Group of Seven (G7) countries: Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States. Since then, the organisation has grown to include 39 member countries, along with several observer organisations, including the International Monetary Fund. The 39 members account for more than 90% of global GDP.

South Africa, which joined the FATF in 2003, is the only country in Africa to be a full member of the organisation.

If you have not followed the “greylisting” news at all then it would be best if you read this article first. 8 min read.

SARS goes after 400 South Africans named in Panama papers

SARS commissioner Edward Kieswetter told ENCA that it established a division to look more closely at high net-worth individuals (HNWI) and their assets. 

“Wealthy people often have the means to structure their affairs so that it masks their true wealth,” he said.

At least SARS is doing its best to monitor citizens within its jurisdiction even if SA was greylisted. 3 min read.

Stage 16 load-shedding schedules for South Africa — Eskom responds

A workgroup comprising Eskom, its System Operator, and industry stakeholders is revising the code of practice governing South Africa’s load-shedding stages.

There is no doubt about it that as critical as the energy crises is, it is also complex. 3 min read.

Businesses prepare for grid collapse in South Africa

While The South African Reserve Bank (SARB) stressed that it is unlikely that a regional or national grid failure could occur, higher and longer stages of load shedding have sparked fears among industries such as the telecom, retail, mining and financial services sectors – with many executing scenario planning in case of a total grid collapse.

3 min read.

One of South Africa’s most important industries is having a good start to 2023

The South African logistics sector had a good start to 2023.

“The South African economy is in dire need of a functioning logistics network amid all the economic woes currently plaguing our country and all stakeholders should unite to address the obstacles in the industry. From this point of view, recent developments to address the sector’s challenges, as mentioned in the 2023 National Budget, is indeed a step forward and welcomed,” said Hein Jordt, Chief Executive Officer of Ctrack Africa.

All sectors intersect at some point.  Search for the vulnerabilities to mitigate for risk and opportunities to realise potential. 6 min read.

Can we embrace a circular economy?

With our pull on the planet’s resources, are we bold enough to embrace a circular economy? The potential benefits are not just material, argues Travis Elsum.

A very well argued paper for mending of our ways to save the planet and ourselves. It brings the actuary right into the transition to the circular economy, challenging actuaries to provide much of the modelling and risk analysis required to map the transition. 15 min MUST read.

Insurance and related industry highlights

China Urges State-Owned Firms to Drop Big 4 Auditors Over Data Security Concerns

Chinese authorities have urged state-owned firms to phase out using the four biggest international accounting firms, signaling continued concerns about data security even after Beijing reached a landmark deal to allow US audit inspections on hundreds of Chinese firms listed in New York.

Read this article because it shows you how internal policy can influence global relations and thereby the businesses which exist to service companies in China. 4 min read.

Death toll climbs above 50,000 after Turkey, Syria earthquakes

The number of people killed by the earthquakes that struck Turkey and Syria earlier this month has now passed 50,000, according to the latest figures from both countries.

In Turkey alone, 44,218 people died as a result of the earthquakes, the country’s Disaster and Emergency Management Authority (AFAD) said on Friday, while the latest announced death toll in Syria was 5,914.

A quick read of devastation and some insight as to why so many buildings collapsed. The articles below however focus on the Turkey context and the challenges that the industry has to contend with in the country.

Global Reinsurers to Bear Bulk of Losses from Turkey-Syria Earthquake: Fitch

3 min read.

Earthquakes Deliver Another Blow to Turkey’s Re/Insurance Industry: Reports  

This article provides great context on how the industry works or doesn’t in Turkey. 4.5 min read.

CEO Viewpoint: It’s No Longer Enough to Just Insure

The expansion of the insurance value chain to include risk mitigation has been underway for decades. But in recent years, it’s been rapidly progressing toward a tipping point where the “insurance” sector brand will be reinvented as “risk management and insurance.”

This is a forward thinking article and it appeals to the industry not to lose its founding principle to help society avoid loss and needless suffering. 3.5 min read.

Investments

Includes Banking, Cryptocurrency, ESG and opinions on investing.

What did SA fund selectors think of the budget?

To find out how the Citywire South African community felt about what the minister had to say, we asked four local fund selectors to give us their views on the Budget and what it might mean for how they are thinking about their portfolios.

This is worth a read, find the patterns of common ground and note any differences. Commentary from top representatives of Morningstar Investment Management South Africa, CIO, Hollard Investments, Head of multi-management, Nedgroup Investments and PPS Investments. 4.5 min read.

A bad year for SA bonds, was still a good year for bond investors

Head of investments SA at Portfolio Metrix, Philip Bradford, writes that local bonds ‘have many of the characteristics of an ideal investment’.

An easily accessible article about bonds as an investment at such an interesting time in our recent economic history.  4 min read.

Why nobody is making $60m movies any more…

… and what that means for the funds industry. Citywire Selector editor Chris Sloley explains.

This is a great article because we all enjoy a good movie right? We may not think of the industry behind the movie as an investment. Read this article and make the shift from the film industry to investment companies – small medium, and large. Some interesting parallels drawn.  Some new words for you unless you knew them already! 4 min read.

Bifurcation: the division of something into two branches or parts. (Oxford Languages)

To stump up: Informal British English, to pay (an amount of money) especially when one does not want to. (Cambridge Dictionary)

Jettison: abandon or discard (someone or something that is no longer wanted).(Oxford Languages)

Fintech, digitisation and AI

Includes Insurtech, blockchain, AA (Advanced Analytics)

On the brink: Realizing the value of analytics in insurance

Advanced analytics (AA)—including artificial intelligence and machine-learning methods— continues to be a top-of-mind topic among executives in the insurance sector. However, despite significant value at stake—an estimated €1.2 trillion in value globally¹—and increased competition from tech-native entrants, the uptake and impact of AA in insurance across Europe, the Middle East, and Africa (EMEA) is varied.

Robust report from McKinsey based on a recent study of 59 companies. 18 pages is a long read but worthwhile to gain perspective on this topic.

Opportunities Across the Metaverse for the Insurance Industry

The metaverse is more than just hype, according to Dennis Winkler, director at ISG Insurance, and carriers who don’t begin to embrace this next iteration of the internet are likely to fall behind. In this article, Winkler discusses the opportunities and risks of the metaverse for insurers, and how they can harness this new technology to continue serving new generations of consumers.

A summary of the opportunities and risks in the Metaverse for the industry, read this article to be informed about the potential in this space. There is a warning that insurers should not be left behind. 6 min read.

Cyber and cyber security

Ransomware Attacks on Industrial Firms Increased by 87% in 2022

Hackers last year targeted mining industries in Australia and New Zealand, and continued their focus on renewable energy companies in the US and the European Union, the cybersecurity firm Dragos Inc. said in a report. Attackers also increased or accelerated their attacks on energy, food, water, electrical and natural gas sectors, the company determined.

Read the short article and then treat yourself to the podcast below which will unpack the risks of insurance. 2 min read.

Experts Urge Empathy, Thoughtfulness for Insurers in Challenging Cyber Landscape

While the continuously evolving cyber threat landscape is a growing problem for insurers, experts on this episode of The Insuring Cyber Podcast say it’s not an insurmountable one, and empathy and thoughtfulness will be key as insurers seek to tackle it.

Valuable insights into this market which could send insurers running but isn’t thankfully. A 32 min podcast while you’re cooking or doing a workout or you can read some of the discussion in 4 mins on the page.

Diversity, equity and inclusion

Includes women in work, finance and STEM

Working women in South Africa proved their resilience during COVID - as a result they’ve enhanced their well-being

Our study investigated the impact of COVID-19 on working women in South Africa. We surveyed 402 working women. Most were in the 36-45 years age range, married or living together, and better educated than South African working women in general (44.5% held a postgraduate degree). We looked in particular at work-life balance, well-being and liminality (uncertainty during a time of change).

If you’re a woman, feel empowered by the fact that you can lobby for better hybrid working conditions considering the findings of this report. 4 min read.

Liminal - relating to a transitional or initial stage of a process. (Oxford Dictionary)

Climate change

La Niña is finishing an extremely unusual three-year cycle – here’s how it affected weather around the world

It was anchovy fishermen in Peru who first noticed and named El Niño events in the tropical Pacific hundreds of years ago. Their catches would fluctuate and the largest declines were seen near Christmas when the ocean was at its warmest – they called it El Niño de Navidad, the boy of Christmas.

With a larger network of observations and some inspired statistical analysis, it became apparent that this decline in fish stocks was part of a Pacific-wide phenomenon including changes in the ocean and atmosphere. This was ENSO, the El Niño-Southern Oscillation.

Find out about La Niña and El Niño-Southern Oscillation in this article which provides a lot of evidence for why these phenomena exist, but also state that we can’t be sure how they will play out in the immediate future. 4 min read.

More health issues and deaths from heatwaves, MRC scientists warns

The recent debilitating heatwave linked to the deaths of seven Northern Cape farmworkers is just one indication of what South Africa could experience in the future as more intense, frequent and longer hot spells cause temperatures to soar before summer, warn scientists.

Note that this article links the long heatwave of 2015/2016 of 77 days to El Niño-Southern Oscillation.  3.5 min read.

Can we embrace a circular economy?

With our pull on the planet’s resources, are we bold enough to embrace a circular economy? The potential benefits are not just material, argues Travis Elsum.  15 min MUST read.

About YOU

How do I improve my immunity? Expert shares tips on what to do - and what to avoid

The human immune system is arguably the most complex system in the human body. But scientists have made a lot of progress in understanding how it functions.

That’s important for understanding illnesses and how to manage them. For instance, it’s important to understand that an immune response takes several days to fully develop. This knowledge would hopefully prevent people from getting impatient and seeking inappropriate care.

5 min read.

PW#877: Stop being a people pleaser!

You should stop being a people pleaser if you want to become a more effective writer…

If you’re a writer and a people pleaser, I can tell you how your life is going to go.

Your writing side will lose and your people-pleasing side will win.

I always read Daphne Gray-Grant’s blogs not because I am writer, but because I find that her advice can be used for whatever goal I am pursuing at the time.  You can do it too. For example, if you’re a student replace the writer focus with your studies or the exam that you need to pass to qualify. If you’re an experienced actuary replace the writer focus with your career objectives.  

A very worthwhile 5 minute read and if it makes you feel uncomfortable – that’s good! You may change your habits.