Managing risk strategically

KEY RISKS AND OPPORTUNITIES

Risks and opportunities, stemming from both the external context and the internal operating environment, are inherent to any business setting. At AYO, we approach these risks and opportunities in an integrated manner, striving to minimise value erosion, while capitalising on possibilities to create value for our stakeholders.

The Group’s risk profile, appetite and tolerance level are set out by the Board in a formal Group Risk Charter, that is aligned with the International Risk Management Standard and the requirements of the King IV™ Governance Code. The executive team continuously monitors inherent risks (both internal and external) and identifies appropriate responses, striving to minimise the residual risk rating for the business. Each Board committee has oversight of the risks within the ambit of its scope and authorises the application of suggested measures. The internal audit unit performs an independent objective assurance function on the adequacy and effectiveness of the Group’s governance mechanisms, risk management and internal controls. The external audit partner provides an audit opinion, in accordance with all relevant prerequisites set out in the Companies Act, the JSE Listing Requirements and the King IV™ Governance Code.

Critical risks are identified and prioritised by a multi-disciplinary team, taking into account the likelihood of occurrence and the potential impact of each scenario. Mitigation strategies are then developed and implemented, under the guidance of the executive team, the audit and risk committee and the Board. Inherent (before response) and residual (after response) risk ratings are continuously measured and compared by the internal audit function, to evaluate the effectiveness of mitigating controls adopted by the Group.

AYO risk matrix