KPMG: Why most companies collapse

Dar es Salaam. Most of the companies fail because they do not take on board all risk factors and learn how to deal with them, according to KPMG Enterprises.

The remark was made during a dynamic risk assessment meeting organised by KPMG, which aimed at identifying, connecting and visualising risks in four dimensions. 

The KPMG partner, Mr Salim Bashir, said there are various forms of risks that spill over into each other and not discretely as companies think.

According to him, when a company adheres to government regulations, various risks spill over, which include fines and closure, to mention but a few.

"Status of the business is also among the risks. Therefore, it is imperative for the companies to take on board all the risks and combine them in order together to be able to deal with them separately," he said.

The KPMG global leader, Dr Andries Terblanche, said that companies, which focus on optimising returns, forget about the risks that can lead to the collapse of their companies.

"Normally risks are okay in an environment that does not change, but our environment has something new every day, which necessitates enough preparation," he said.

For his part, KPMG manager Ian Ngugi said today's highly interconnectedness and volatile world dominated by new technology and emerging business models, the past is no longer a reliable guide to the future.

He said, the past days are a poor fit for the future as trends that shape the future have changed.

"Risks combine, they spill over into each other, they don't manifest neatly in isolation, and therefore companies no longer have the luxury of dealing with risks discretely,” he said.