Page 51 - AERC Strategic Plan 2 July2020

THE AERC 2020–2025 STRATEGIC PLAN

AERC Risk Management

The success of the AERC 2020–2025 strategy hinges on managing both strategic and
operational risk levels associated with the opportunities presented in the plan to realize
anticipated outcomes. The potential priority risks that have been identified include
resource mobilization risk; brand/reputational risk; business continuity risk; financial
and exchange risk; cyber security risk; and a high concentration of AERC activities in
specific countries. The key critical risks and mitigating measures are summarized in the
table that follows.

Resource mobilization risk

Funders have shifted their priorities and changed their funding modalities, with many
preferring to finance specific, earmarked projects that do not necessarily contribute
funds to AERC’s core programmes. AERC also risks failing to mobilize adequate resources
to meet planned activities due to the ever-changing global economic environment. The
funding concentration reliance ratio of AERC’s five largest funders is currently 75 per
cent. Diversifying the funding base through greater African stakeholder participation will
minimize funding concentration and guarantee sustainability. AERC will also explore the
possibility of the host country (Kenya) housing AERC, with savings on occupancy costs of
the Consortium offices being channeled to programme activities.

Brand and reputation

Potential risk factors that could affect the AERC brand and reputation include failure to
ensure that the attractiveness and relevance of its programmes are continually updated;
low visibility of its activities; and failure to manage critical relationships with funding
partners, governments, and other key stakeholders. Key strategic interventions to mitigate
the risk include implementation of the communication strategy, which incorporates
a stakeholder management plan, a media outreach plan, digital engagement, and
alumni outreach.

Exchange risk exposure

AERC receives a significant amount of its income from non-US denominated currencies,
such as Euros, Sterling Pounds, Swedish Kronor, Norwegian Kroner, and Kenya Shillings.
However, the bulk of its obligations are in US dollars. Exchange-rate fluctuations of other
currencies will lead to large unrealized and realized exchange losses and impairment of
dollar income available for AERC activities. As a result, the potential risk of derailment of

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