49 / 136
AfroCentric INTEGRATED ANNUAL REPORT 2016
47
MATERIAL RISKS AND OPPORTUNITIES
Material matters
Why material?
Risks
Opportunities
Stakeholders
Response
Political uncertainty leads to a potential
South African ratings downgrade, which
in turn leads to economic setbacks
whereby increased numbers of the
population are unable to afford medical
cover. Retrenchments, as a result of a
stagnating economic environment, result
in membership contraction for medical
schemes, thus inherently limiting the
Group’s growth
•
Diversify revenue streams
•
Improved healthcare protocols
•
Driving transformation to favourable
ratings for tenders for both public and
private business
• Regulators
• Employees
• Government
Diversifying revenue sources
Growth
As Medscheme’s and Helios’s fees are
based on membership, a lack of growth
or loss in membership of medical
schemes under management will limit
the Group’s growth and profitability
Healthcare costs limit the Group’s ability
to grow the business. Increasing costs
of healthcare result in low growth in the
medical scheme sector, and reduces the
Group’s ability to grow the client base
as medical cover becomes unaffordable
• IT Enhanced platform (Fusion) will
ensure that there are efficiencies and
lower healthcare costs
• Diversifying revenue streams to
limit dependence on fee-based
membership and maximising
synergies through the relationship
with Sanlam
• Shareholders
• Regulators
• The Group’s clients (schemes)
Enhance shareholder value
Diversifying revenue sources
Growth
POLITICAL
UNCERTAINTY
GROWTH IS LIMITED BY
HEALTHCARE COSTS
CLIENT
RETENTION
Administering the Group’s core
business, Medscheme requires a culture
of cost consciousness in order to
maintain sound client satisfaction levels.
Retaining the client and client base is
critical. Poor client service negatively
impacts client retention, is detrimental
to the relationship with the medical
schemes and counter to the Group’s
strategy
The magnitude of the Group is
measured by the number of customers
and clients as well as by the value of the
various schemes administered.
As such, the gain or loss of key clients
can have a variable impact
The loss of members due to
retrenchments and the economic
downturn will jeopardise the future of
medical schemes, which will impact
negatively on revenue and profitability
Unsustainably high medical costs will
jeopardise the future of certain medical
schemes, which will impact negatively
on revenue and profitability
Inability to provide exceptional
customer service will lead to schemes
choosing a competing administrator
which will impact negatively on revenue
and profitability
Build a performance driven culture
among employees to deliver
exceptional client service
• The Group’s clients (schemes)
Client service
Diversifying revenue sources