MATERIAL MATTERS
Our material matters are the factors that substantively affect our ability to create and sustain value over the short, medium and long term.
Material matters matrix
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| Material matters | Excalating healthcare costs | Fraud, waste and abuse | Cyber crime and data security | |||||||||||||||||||||||
| Why it is material |
Fewer people can afford private healthcare due to escalating costs, and it is becoming more difficult for open schemes to attract new members. Open and closed schemes are forced to reduce certain benefits. |
Fraud, waste and abuse originate from third parties who defraud our schemes or from unauthorised activity by employees. This costs the Company money and/or escalates healthcare costs. |
Cybercrime has become more prevalent as technology has advanced. Inadequate investment in cybercrime detection and prevention technologies could leave the Group vulnerable to cyberattacks. |
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Risks |
The future of open and closed schemes is being challenged by unsustainable and increasing medical costs. This is a substantial risk to the shorter-term sustainability of the private sector. Exchange rate fluctuations drive up the costs of imported medical components. |
Without the capability to proactively monitor and analyse big data, a large portion of fraudulent and abusive claims go undetected. This impacts the financial sustainability of the medical schemes, resulting in increased member contributions, which could result in membership loss. |
Cybersecurity vulnerabilities expose our intellectual property and client relationships to malicious attacks. These could destroy and/or corrupt of key information and compromise client data. |
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Strategic response |
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| Material matters | Member retention for clients | Political uncertainty | IT dependency | |||||||||||||||||||||||||||||||||||
Why it is material |
We have adopted a culture of cost containment to decrease the healthcare costs for our clients’ schemes while improving the quality of healthcare for our schemes’ members. |
Political uncertainty and the challenging economic conditions in South Africa are straining our schemes’ members spending power. Thus, it is difficult for our client schemes to attract new members, which hampers revenue growth. The recent VAT increase could make healthcare more expensive. |
Our IT systems are the core of our operations. They are vital to remain relevant in the face of business change/growth and market consolidation. We aim for high levels of operational quality. |
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Risks |
Low-quality customer service could cost us clients. |
The strained economy and the difficulty our clients have in retaining members threaten the future of medical schemes and affect the Group’s revenue. |
System instability increases our risk of business interruption. Failing to adapt or respond to disruptive technologies could impact our relevance. |
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Opportunities |
The Group can build a performance-driven culture among employees.
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| Material matters | Transformation | Project risks | Regulatory compliance | ||||||||||||||||||||||||||
Why it is material |
AfroCentric is a proud corporate citizen devoted to South Africa’s transformation agenda. Transformation is one of our strategic objectives, and we aim to optimally comply with the B-BBEE codes and relevant legislation. |
The Group runs a number of projects; therefore, it is imperative that the Group ensures:
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Non-compliance to regulatory affairs could impact profits and damage our reputation. |
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Risks |
The Group’s ability to win tenders and contracts could be compromised. |
Poor governance and quality of resources due to conflicting business priorities may cause budget over-runs. |
Our accreditation and, subsequently, our ability to do business could be affected by failing to ensure adequate levels of compliance. There are various penalties for contravening these applicable legislations. |
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Opportunities |
Our high B-BBEE level places us in a favourable position to win tenders in the public and private sector, and it demonstrates our commitment to contribute to the country’s upliftment. |
Re-clustering business units in a matrix framework will enhance the alignment of strategic imperatives. |
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| Material matters | Technological innovation | Loss of critical skills/employees | |||||||||||||||||||||||||||||
Why it is material |
Technological innovation drives cost efficiencies and maintains the Group’s competitive nature. |
AfroCentric employs experienced and skilled employees, particularly actuarial, IT and medical specialists who are in demand locally and internationally. Retaining our employees and intellectual capital within the Group is vital. |
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Risks |
We may miss opportunities to diversify our revenue streams and reduce the costs of healthcare for our clients. |
There is a shortage of critical skills in the country, and attracting and retaining key employees has become critical. |
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Opportunities |
AfroCentric’s IT platform system, Nexus, could become the leading healthcare software in the market. Innovative products and services that use our IT capabilities, such as the electronic health record and smaller scale admin systems. |
The Group has successfully implemented the leadership competency model, succession planning and short and long-term incentives to attract and retain critical skills. We also develop and train our talent to ensure retention. |
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Strategic response |
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