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
  • Oversee implementation of risk management framework
  • Drive consistent risk management processes
  • 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
  • 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
  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
  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