Governance of risk

Structure

The Board accepts its responsibility for the governance of risk, which includes the total process of risk management and the formation of its opinion on the effectiveness of the risk management process. The Board forms its opinion on the process of risk management based on the recommendations of the ARCC and is satisfied with the effectiveness of the risk management process. The ARCC is responsible for ensuring that Blue Label has implemented an effective policy and plan for risk management and that the risk disclosures are comprehensive, timely, and relevant. The Board and Committees' responsibilities are documented in the Blue Label Integrated Risk Assurance Policy and Framework which is reviewed annually by the ARCC.

Management is accountable to the Board for designing, implementing, and monitoring the process of risk management. The Internal Risk and Compliance Committee (IRCC), established by management, supports the enterprise-wide risk approach by identifying, evaluating, and measuring Blue Label's risks and compliance in all functional areas of the Group, as well as maintaining adequate internal controls. The IRCC reports to the ARCC bi-annually in this regard, which oversees the effectiveness of risk management arrangements.

Process

Blue Label's strategic risk assessments are conducted bi-annually. These assessments are facilitated by the compliance officer, in a "second line of defence" role, who plays an important part in evaluating the risk management process and guiding management to continuous improvement.

To encapsulate our focus on the capitals and the triple context in which we operate, the risk process incorporates value drivers that broadly reflect the expectations of our stakeholders and against which risks are identified. The risk assessments conducted involve risk identification and prioritisation at subsidiary, associate and holding company level through interviews with Senior Management and key members of executive management to confirm risks, their descriptions and prioritisation. Each risk is evaluated in terms of its potential impact, the likelihood of occurrence and the perceived effectiveness of controls in place to manage the risks according to set criteria.

Blue Label has identified its strategic risks and acknowledges that its appetite to accept risk varies across those identified. The assessment process includes the setting of risk appetite and tolerance levels on a qualitative basis. Risk appetite and tolerance levels are reviewed annually at the ARCC and ratified at Board level.

The outcome of the risk assessments is integral in refining our strategic response and in developing a risk-based plan for internal audit engagements for the forthcoming year. Action plans are documented in response to risk appetite and tolerance thresholds that are breached. Blue Label's material risks are listed in Material risks and opportunities