LEADERSHIP AND STRATEGY
Understanding risks and opportunities
Identifying risks and opportunities is an integral part of our strategic process, and we consider both the potential negative and positive impacts on our business
- Ultimate accountability for risk management
- Delegate risk management responsibility to CEO and CFO
- Risk committee of the board oversees risk and opportunity management
CFO
- Oversee implementation of risk management framework
- Drive consistent risk management processes
PROCESS
- Perform process reviews and risk assessments
- Evaluate market information
- Recommend controls to be put in place to mitigate risk
- Monitor effectiveness of controls
- Alignment of risk management processes with business strategy
SPECIALISTS
- Embedded in key business areas
- Implementation of risk plans and activities
- Monitor effectiveness of risk plans
Risk management processes align to our strategic planning and budgeting cycles, and risk management plans are compiled annually and updated as required. Risk specialists are embedded in key business areas and responsible for the implementation of plans and mitigation activities. Performance against approved risk management plans and results of activities and processes are monitored by the group's centralised governance forum.
The risk committee has oversight on risk and opportunity management on behalf of the board. It evaluates key risks and opportunities identified through assessments that consider the environment in which we operate as included in the risk register and heatmap. It then reviews disclosures as recommended by King IV. The risk register is reviewed biannually, in November and March, supported by heatmaps demonstrating the relative positioning and movement of key risks. The risk management plan and budget are reviewed annually by the risk committee.
Risk profile
The risk profile is the result of the board's appetite for risk and the ability of management to deliver performance within aligned tolerance variables. Such variables are monitored and reported on during the operational and strategic reporting cycles. Results from the enterprise-wide risk management process are integrated into the business's strategic, operational, compliance monitoring and reporting activities, and the management of risks forms part of ongoing management responsibilities. During FY2019, an external assessment of the adequacy of enterprise-wide risk management processes was performed and results indicated varying degrees of maturity. The recommendations following this process have been turned into action plans for implementation, which are being monitored. An effectiveness review is planned for FY2020.
Strategic risks
| Risk | Description | Our response | Opportunities | Relevant capital | |||||||||||
| Regulatory | Potential changes in regulatory policy and legislative frameworks | Compliance and proactive engagement with regulators and industry bodies | Improved understanding of industry complexities and challenges | Social and relationship capital | |||||||||||
| Disruption | Technology disruption results in increased competition, including increased competition for content rights | Invest in product and service innovations and retain content rights | Continuous re-evaluation of products and services to unlock new opportunities | Social and
relationship capital Intellectual capital |
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| Content costs | Content rights are becoming increasingly expensive | We regularly evaluate our content contracts to ensure they continue to provide value and remain competitive | Increased investment in local content | Social and
relationship capital Intellectual capital Financial capital |
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| Economic and currency risk | Consumers are facing increased economic pressure, potentially affecting the size of our customer base The value of the local currency relative to supplier currencies places increased cost pressure on securing international content |
Continued focus on reducing costs and improving efficiencies ensures we remain competitive Effective use of hedging instruments to manage volatility in cash flows |
Emerging technologies and innovations could unlock efficiencies and reduced costs | Financial capital | |||||||||||
| Business continuity | Technology failures in broadcasting, digital playout, customer service or value-added services | Implementation of IT control framework and investing in key systems while simplifying and consolidating internal systems | Simplified systems result in an improved operating environment, cost efficiencies and customer experience | Manufactured capital | |||||||||||
| Cybersecurity | Security of data, programming and information | Investing in improved systems, identifying vulnerabilities and remediation thereof | Improved systems security and reduced business interruptions | Manufactured capital | |||||||||||
| Customer preferences | Changing customer preferences and viewing habits | Research and development into understanding the preferences and habits of our customers. Develop products to address changing consumer habits |
Improved online and OTT offerings Developing local content and talent |
Intellectual capital | |||||||||||
| Talent management | Loss of key talent impacts negatively on our business operations | Talent development programmes and employee engagement initiatives | Retaining the best talent in the market strengthens our position | Human capital | |||||||||||
| Increased costs of basic services | Increased costs associated with electricity, water and compliance with emissions regulations | Energy efficiency, saving measures, and waste reduction | Position MultiChoice as a leader | Natural
capital Financial capital |
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