By Raymond Sia
The Strait of Hormuz is a narrow waterway between Iran and Oman through which roughly 20% of the world’s daily oil supply passes. Since February 2026, it has also been the center of a crisis and war.
Escalating conflict between the United States and Iran led to blockades, mined shipping lanes, and attacks on commercial vessels, at (many) times halting transit through the strait almost entirely. The consequences rippled far beyond the Gulf: oil prices climbed, inflation followed, and the strain has been felt by businesses and households worldwide (including Cambodia), months after the fighting began.
It is a strong & sobering reminder of what happens when a single chokepoint fails.
But the real lesson here isn’t about geography. It’s about structure. Every industry, every institution, has its own version of Hormuz: a narrow dependency that looks perfectly fine right up until the day it doesn’t. Every organization would have its own “Hormuz” or chokepoints which are peculiar and unique.
We should avoid being caught or being held hostage by our own “Hormuz”.
Three chokepoints which are prevalent in any organizations deserve close attention.
1. People: Concentration Risk in Key Talents.
We would all agree that people or human capital is the most important component in any organization. Finding the right person with the right personal attributes alongside experience is often not an easy feat. When an organization has found that “right person”, there would often be more reliance on that individual on daily tasks.
Organizations create concentration risk when reliance is on a small number of individuals to keep critical functions running or when important tasks or projects are assigned.
There’s a telling test of this: if something urgently needs to get done, watch who the task goes to. It’s usually the busiest person in the office or the second busiest. That’s not a compliment to their competence; it’s a warning sign about how concentrated institutional knowledge and capability have become.
When expertise sits with a handful of people rather than being embedded in systems, processes, and a broader bench of talent, the organization is exposed.
People leave, get sick, retire, or simply reach capacity. Loyalty with aptitude is a rare commodity in the employment market today.
An organization that cannot function smoothly without two, three or a handful of specific individuals has built its own strait; and it is just one bad day away from a blockade (figuratively and literally).
- Business : Reliance on Single Business Stream for Income & Profitability.
Not many businesses have the priviledge to operate as a monopoly.
Most businesses would operate under Pareto’s principle or the 80:20 rule; which tells us that most things in life (and even in business) are not evenly distributed.
Reflecting on Pareto’s principle, we see many businesses with 80% of their revenue or profit are derived from 20% of their products or services. We often see the same phenomenon in human capital productivity; where 20% of an organisation’s employees contributing to 80% of the productivity and results.
The risk of reliance on a single product or business stream is real. Case in point is the Cambodian banking industry. At least 80% (or more for some financial institutions) of the banking industry’s income and profitability is derived from loans and lending activities. While many financial institutions are working hard to diversify their income streams; to increase the non-interest income / fee component, the reality remains that loans and lending activities will continue to be a significant income contributor for the foreseeable future.
In the era when interest rates are low and money is “cheap” and easily accessible (think pre-pandemic period); financial institutions in Cambodia were more eager and also found it easier to lend, borrowers were able to service their debt comfortably, and loan defaults stay manageable.
But when economic environment changes due to combination of domestic economic headwinds and a confluence of external macro-economic and geo-political headwinds (which are beyond our control), the situation changes quite drastically.
The last three years have seen customers adjusting to higher interest rates, elevated inflation rates and slower economic growth and this have squeezed customers’ cash flow, pushing up loan delinquency rates and increasing non-performing loan ratio (“NPL”).
Higher or rising NPLs create a double bind.
NPLs dampen financial institutions’ appetite (and confidence) to lend; and this has a direct impact on financial institutions’ profitability due to the heavy reliance on lending activities as a source of income (and also higher loan provisions for NPLs).
A business model overly concentrated on lending income, without sufficiently diversified revenue streams, is vulnerable to exactly the kind of macroeconomic cycle we are now living through.
3. Learning & Knowledge: The Risk of Institutional Ignorance (or Arrogance)
The third chokepoint is less visible but just as dangerous; if not the most lethal of them all – the depth or shallowness of understanding and expertise across the organization.
An employee who doesn’t fully understand their products, the risks and regulations they work with every day isn’t just underperforming; they are a liability. This liability expatiates when we have such employee assuming senior and higher authority roles.
Gaps in knowledge and the lack of depth in expertise & experience don’t stay contained. They surface as compliance & process failures, poor (or even wrong) customer advice, mispriced risk, slow and reactive decision-making.
Continuous learning cannot be treated as a nice-to-have. It is a necessity in today’s business and corporate world.
On the flip side, arrogance or assuming an organization is too big or influential to fail is another recipe for disaster in the long-run.
Raymond Sia is the author of the “Right Angle – The Collection Volume One”. He has been with Canadia Group since 2018 and currently serves as the Managing Director of Canadia Investment Holding Plc. He is also a Board Director for Canadia Bank and Credit Bureau Cambodia. Raymond believes no organization is spared from having its own “Hormuz” or chokepoints. The first step in dealing with any organization’s “Hormuz” is acceptance of the issue; and not denial. A strong advocate for financial literacy, Raymond also believes banks & bankers alike should practice Responsible Banking – a principle which he believes should apply equally to lending & deposit-gathering activities. The views expressed above are strictly the author’s personal opinion and do not represent the organizations & institutions he is attached with or represents.
