MATERIAL RISKS AND OPPORTUNITIES
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POLITICAL UNCERTAINTY | GROWTH IS LIMITED BY HEALTHCARE COSTS | CLIENT RETENTION | |||||||||||||||||
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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 | 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 |
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 |
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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 | |||||||||||||||||
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Build a performance driven culture among employees to deliver exceptional client service | |||||||||||||||||
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IT DEPENDENCY | REGULATORY COMPLIANCE | TRANSFORMATION | |||||||||||||||||
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The Group’s operations are greatly dependent on its IT systems and infrastructure. Investing in technology to achieve greater cost efficiencies and to promote technological innovation is critical in remaining competitive | Increased healthcare costs and regulatory issues impact on the long-term sustainability of the medical schemes’ clients
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Transformation is a strategic objective of the Group, in line with its commitment to the country’s transformation agenda. Compliance with B-BBEE codes and legislation is fundamental to the Group’s sustainability and to remaining competitive in the healthcare sector Our Level 2 B-BBEE status positions the Group well for securing contracts and tenders |
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IT implementation and disruption will impede on the growth of the business and lead to loss in shareholder value | Regulatory non-compliance will lead to loss of our accreditation, impeding the ability to do business. This will negatively impact on revenue and profitability | The ability to secure tenders could be compromised if the Group does not maintain and improve its transformation credentials | |||||||||||||||||
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The success of the enhanced IT platform, Fusion, is critical to the future of business in terms of upgrading to an enhanced system and implementing improved levels of technology | Ongoing engagement with regulatory bodies on proposed regulation and legislation as well as the favourable outcome of the Competition Commission’s inquiry | Strong B-BBEE credentials will ensure favourable ratings for tenders for public and private sector business, demonstrating leadership as a South African Group | |||||||||||||||||
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IT DEPENDENCY | REGULATORY COMPLIANCE | |||||||||||
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AfroCentric is a skills-intensive business, particularly in the actuarial, IT and specialist medical fields, all of which are portable skills. Experienced and skilled employees are highly mobile, and in demand locally and internationally Retention of skills is critical to retaining intellectual property and managing the knowledge base |
Cybercrime is increasingly becoming a concern across the industry. If not managed, this could result in financial penalties and loss of consumer confidence
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In a skills-intensive business, key and scarce human capital are costly to replace | Data interception could lead to the loss/corruption of critical information and intellectual property as well as jeopardise client relationships | |||||||||||
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Increased investment in human capital and through its empowerment credentials the Group becomes increasingly attractive to black professionals | Data interception could lead to the loss/corruption of critical information and intellectual property as well as jeopardise client relationships | |||||||||||
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Employees |
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SUMMARY OF MATERIAL MATTERS
The AfroCentric Group defines materiality as those matters that substantially affect the organisation’s ability to create and sustain value over the short, medium and long term. The approach to materiality considers the external environment, stakeholder expectations and any other identified risks and opportunities that may affect the ability to execute the strategy.
An assessment was undertaken by the CEO and other internal stakeholders. Material matters were identified through a process of reflecting on those previously identified; considering these matters in the context of the external environment and the key corporate risks; considering the opportunities each of these provides; linking each to legitimate stakeholder interests and concerns; aligning these to the strategy; and finally prioritising the matters based on their impact and likelihood.
