Managing our risk
As part of the annual risk reporting process, the Divisions’ Risk Officers report any major risk incidents that occurred during the year to the Risk Committee. These incidents are defined in the Group Risk Policy as ones that directly or indirectly impact annual Divisional earnings before interest and tax or total assets by 5% or more (quantitative); or have significant qualitative dimensions that may include:
- A major concern to Massmart Holdings’ public shareholders;
- Serious damage to the reputations of the Division and/or its executives and management;
- Affecting a major portion of the Division’s customer base;
- A large fraud or theft;
- A legal matter that may result in major financial or reputational risk;
- A material ethical or compliance breach, whether qualitative or quantitative;
- A major breakdown in the control environment;
- Significant IT system failure;
- Nationwide media coverage and/or public concern; or
- Affecting the Division’s or Group’s ability to implement or execute its strategy and business objectives.
The Risk Committee considers there to be two categories of Group risk that can broadly be described as Strategic/environmental risks and Operational risks.
We minimise the asset base of our African operations thereby reducing the translation effect of any currency movement. We repatriate cash profits as frequently and settle cross-border liabilities timeously.
Due to the significant size of many of our stores and DCs, we are cognisant of the negative impact fire could have on those operational sites.
To minimise our risk of fire we have in place safety measures including replacing roof insulation with fire retardant insulation in many stores, ensuring the safe location of power-generators and the safe storage of flammable products. We also work with external risk assessors and insurance providers.