Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019 | 3
1. Overview ..........................................................................................................................................3
2. Purpose of Sasria .............................................................................................................................4
3. Vision ................................................................................................................................................4
4. Mission .............................................................................................................................................4
5. Core Values ......................................................................................................................................4
6. Mandate ...........................................................................................................................................5
7. Operating Principles .......................................................................................................................5
8. Business Model ................................................................................................................................6
9. Delegation of authority ..................................................................................................................8
10. Governance Framework..................................................................................................................8
11. Organisational Structure ..............................................................................................................13
12. Financial Resources Income .........................................................................................................16
13. Risk Management .........................................................................................................................16
13.1 Enterprise Risk Management process ................................................................................................. 16
14. Analysis of Competencies & Environment ..................................................................................19
14.1 Current competencies & resources ...................................................................................................... 19
14.2 Environment within which Sasria operates ...................................................................................... 19
15. Strategic Focus Areas & Strategic Objectives .............................................................................23
15.1 Sustainable revenue growth .................................................................................................................. 24
15.2 Capital management ................................................................................................................................ 24
15.3 Innovation (products & services) .......................................................................................................... 24
15.4 Infrastructure & cost management ...................................................................................................... 24
15.5 People, capacity and capability ............................................................................................................ 25
15.6 Regulatory environment ......................................................................................................................... 25
15.7 Customer-centricity ................................................................................................................................... 25
15.8 Brand development .................................................................................................................................. 25
16. Beyond 2020 ..................................................................................................................................26
16.1 LSM/SME feasibility project .................................................................................................................... 27
16.2 Agriculture insurance administration project .................................................................................. 29
16.3 Enterprise Architecture project ............................................................................................................. 31
16.4 Incubation programme ............................................................................................................................ 34
16.5 IFRS 17 project ............................................................................................................................................. 35
17. SWOT Analysis ...............................................................................................................................36
18. Dividend Policy .............................................................................................................................37
19. Key Strategic & Financial Assumptions .......................................................................................37
20. Key Performance Indicators .........................................................................................................37
21. Alignment of Strategic Objectives to the National Development Plan ....................................45
22. Borrowing Plan ..............................................................................................................................46
23. Supporting Documents ................................................................................................................76
24. Approval ........................................................................................................................................47
ANNEXURE 1: SIGNIFICANCE & MATERIALITY FRAMEWORK .....................................................................48
ANNEXURE 2: FINANCIAL PLAN ....................................................................................................................49
ANNEXURE 3: TOP 10 RISK REGISTER ...........................................................................................................52
ANNEXURE 4: FRAUD PREVENTION PLAN ...................................................................................................66
Corporate Plan & Budget 2018 - 2019
1. OVERVIEW
Sasria SOC Limited (Sasria) is a public enterprise listed under Schedule 3B of the Public Finance Management Act No. 1 of 1999. It is a Short-Term Insurance Com-pany that provides coverage for damage caused by special risks such as politically motivated malicious acts, riots, strikes, terrorism and public disorders.
During the 1976 Soweto uprisings, the Short-Term Insurance Industry decided that it could no longer underwrite losses arising from politically motivated acts of civil disobedience and unrest of the time as the risk was too high and it was dif-fi cult, if not impossible, to purchase reinsurance cover. This resulted in the incorporation of the South African Special Risk Insurance Association (SASRIA) as a Section 21 Company under the old Companies Act (No. 61 of 1973).
The operational structure of Sasria comprised a membership network pool that included all registered Short-Term Insur-ance Companies that underwrite the fi re peril.
Section 6 of the Finance Act No. 94 of 1978 empowered the then Minister of Finance to enter into a Reinsurance Contract with Sasria as a Stop Loss Re-insurer. This Section also aff orded a monopoly to Sasria as the only Insurer with authority to underwrite political perils in the Republic of South Africa. The Reinsurance of Material Damage and Losses Act No. 56 of 1989 had the same eff ect as Section 6 of the Finance Act 94 of 1978.
In terms of Section 10 (i) (t) of the Income Tax Act No. 58 of 1962, Sasria was exempted from paying tax from the date of incorporation. This Section was however repealed, and from January 1996 Sasria became a tax paying entity.
Financially, Sasria started with a zero base. Due to lack of worldwide reinsurance coverage, it was reinsured to a limited ex-tent by the Members of Sasria. In addition, the stop loss coverage aff orded by Government gave cover in excess of Sasria’s reserves and reinsurances in an unlimited amount. Initial rates were agreed with the industry as the risks which Sasria cov-ers were actuarially considered to be uninsurable.
At the time, the mission statement was to underwrite any perils that the conventional insurance market was unwilling or unable to underwrite. Consequently, the perils of Sasria were expanded and encapsulated in the Reinsurance of Material Damage and Losses Act No. 56 of 1989 read in conjunction with the Conversion of Sasria Act No. 134 of 1998.
From the mid 1980’s to date, Sasria perils comprised of the following:i. any act (whether on behalf of any organisation, body or person, or group of persons) calculated or directed to over-
throw or infl uence any State or Government, or any provincial, local or tribal authority with force, or by means of fear, terrorism or violence
ii. any act which is calculated or directed to bring about loss or damage in order to further any political aim, objective or cause, or to bring about any social or economic change, or in protest against any State or Government, or any provin-cial, local or tribal authority, or for the purpose of inspiring fear in the public, or any section thereof
iii. any riot, strike or public disorder, or any act or activity which is calculated or directed to bring about a riot, strike or pub-lic disorder (the term “Public Disorder” shall be deemed to include civil commotion, labour disturbances or lockouts)
iv. any attempt to perform any act referred to in clause (i), (ii) or (iii) abovev. the act of any lawfully established authority in controlling, preventing, suppressing or in any other way dealing with any
occurrence referred to in clause (i), (ii), (iii) or (iv) above.
Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019 | 54 | Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019
Given the monopoly, tax exempt status and low loss history over the years, Sasria accumulated substantial reserves. Ac-cordingly, in the mid 1980’s it was able to purchase reinsurance coverage in the international markets obviating the need for the insignifi cant coverage provided by its members.
In 1998, the Government together with Sasria and its Members reached consensus that the assets of Sasria should be dis-tributed for the benefi t of the people of South Africa. As a Section 21 Company, Sasria was unable to distribute any surplus-es generated. To remedy this situation, the Conversion of Sasria Act No. 134 of 1998 (the Act) was passed and it eff ectively:
• Converted Sasria to a Limited Company.• Made the State the sole shareholder of Sasria Limited.• Allowed an actuarial determination of assets surplus to the needs of Sasria.• Allowed for the payment of the determined surplus as a special dividend payable to the Shareholder to be used to
off -set interest on State debt.• Allowed for the privatisation of Sasria Limited.
The Act was eff ectively implemented and over a two-year period, Sasria was able to pay special dividends totalling approxi-mately R11 billion, to Government.
Currently Sasria functions through a network of agents, the underlying insurance companies. The agents issue the Sasria Coupons and Policies on behalf of Sasria, permit Sasria to attach to the terms and conditions of the underlying policy and are responsible for the premium collection.
During 2012, the new Companies Act (No. 71 of 2008) came into eff ect. One of the requirements was the inclusion of “SOC” in the company name for all State Owned Companies. Sasria Limited became known as Sasria SOC Limited.
2. PURPOSE OF SASRIA
The principal purpose of Sasria is to provide cover for damage caused by those risks listed in the Reinsurance of Material Damage and Losses Act No. 56 of 1989, and any other risks which may be deemed necessary or viable by management and board of directors of Sasria. In addition, it is the purpose of Sasria to research and investigate coverage for any special risk that can be considered to be of national interest.
3. VISION
The vision of Sasria is “To protect the assets of all in South Africa against special risks”.
4. MISSION
The vision will be achieved via our mission of driving a sustainable and vibrant business by:• Balancing shareholder value creation with positive social impact;• Providing excellent customer service;• Being clear and consistent in our communication to our stakeholders;• Developing the skills and capacity of our employees;• Improving our current strategic partnerships and establishing new ones; and• Providing innovative and relevant products.
5. CORE VALUES
The following values underpin Sasria’s pursuit of its stated vision and mission:
Professionalism: We will treat our stakeholders, being customers, employees and shareholder with respect and dedication while remaining accountable to them.
Integrity: We will conduct ourselves in a manner that is fair, transparent and ethical, and uphold high levels of equality and trust.
Teamwork: In the performance of our tasks we will be guided by the ideals of unity of purpose, cooperation and mutual respect.
Innovation: We will create opportunities for creativity and learning, and encourage the same amongst our employees.
Customer centric: We will strive at all times to meet and exceed our customer’s expectations.
6. MANDATE
Sasria is the only short-term insurer in South Africa that provides cover against special risks such as civil commotion, public disorder, strikes, riots and terrorism.
Sasria is accountable to the Minister of Finance via National Treasury. Like all the other insurance companies in South Af-rica, Sasria operates within a well-developed framework regulated by the Financial Services Board (FSB), the non-banking fi nancial services industry regulator. Sasria is a member of various industry associations.
Sasria has a dual mandate:
• Our legislative mandate as a short-term insurance company is to provide cover for special risk events in terms of the Reinsurance of Material Damages Act; and
• Our broader strategic mandate as a state-owned company is to make a positive contribution to transforming the fi nancial services industry in line with the National Development Plan (NDP), in order to create a better, sustainable economic environment for all South Africans.
Sasria delivers on this mandate in a number of ways. These range from delivering continued solid fi nancial results, which enables the company to remain self-funded as a state-owned company, whilst growing and transforming the insurance market and fi nancial sector through a number of initiatives; and Sasria’s Corporate Social Investment (CSI) spend.
7. OPERATING PRINCIPLES
Sasria conducts business in a responsible, disciplined, professional and well-governed way. As a state-owned company, Sasria plays a meaningful role in society by off ering products that will assist in the protection of assets in South Africa against potentially catastrophic special risk events. The company is proudly South African and passionately committed to accelerating its growth and business transformation goals. Sasria’s operating principles are:
• To operate with a core staff compliment.• To operate via an outsourced distribution network (agents) comprising of other short-term insurance companies.• To have suffi cient reinsurance treaties and covers in place• To strive to achieve optimal investment returns.
Sasria also:• Identifi es the insurance needs of the public through research and development.• Conducts itself in a manner that promotes co-operation, mutual understanding and fosters good relations with
relevant third parties, agent companies and intermediaries (brokers) and end-customers in the same manner.• Develops and maintains a work environment that encourages employment equity and skills development.• Establishes a co-operative relationship with employees in order to work towards common goals of profi tability and
high performance.
Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019 | 76 | Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019
8. BUSINESS MODEL
Sasria’s unique business model (Figure 1) enables the company to minimise its operating expenses, off er an extremely af-fordable product to protect the assets of the people of South Africa against special risks, and sustain its solid track record of fi nancial performance.
The company does not sell its products directly to end-customers. Instead, it enters into agreements with other short-term insurance companies and intermediaries in South Africa,who then as agents, represent and sell the special risks cover to the end-customers, be they individuals, businesses, government or corporate entities. The agents and brokers (intermedi-aries) engage with the end-customers on policy administration and collect premiums on behalf of Sasria, in exchange for a service fee.
The only contact that Sasria has with end-customers is on the settlement of claims. Customers submit claims to the inter-mediaries or insurance companies, which confi rm their validity prior to submission to Sasria. Sasria receives and verifi es all claims before payment directly to the customer.
Profi ts, after payment of all claims are invested, subject to retention of adequate liquid reserves. Sasria’s investments earn good investment returns in the form of interest and/or dividends and capital growth.
Operational costs for managing the business include reinsurance premium to reinsurers, the salary bill for employees, compensation to directors and procurement of goods and services. Sasria also pays all the relevant taxes and statutory fees to the authorities, including dividends to the shareholder from the reserves.
Agent
companies and
brokers
Reinsurers
Investments
People
Suppliers
Authorities
Shareholder
Customers
S a s r i a
Pay
clai
ms
Pay commission
Receive
premiums, claim
s
Receive return commission
and reinsurance recoveries
Pay reinsurance
premiums
Invest profit
Pay premiums Submit claims
Pay salaries, directors’ and consulting fees
Make paymentsPay taxes and fees
Pay dividendReceive interest,
dividends, capital growth
Receive servicesProcure products and
services
Figure 1: Sasria’s business model.
Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019 | 98 | Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019
9. DELEGATION OF AUTHORITY
The Board of Directors of Sasria derives its authority from the following:
• Companies Act No. 71 of 2008• Conversion of Sasria Act No. 134 of 1998• Reinsurance of Material Damages and Losses Act No. 56 of 1989• Public Finance Management Act No. 1 of 1999• Short-Term Insurance Act No. 53 of 1998• King IV Report on Governance for South Africa 2016• FSB License• FSB Regulations• National Treasury’s Signifi cance- and Materiality Frameworks.
10. GOVERNANCE FRAMEWORK
Sasria will continue its practice of applying sound governance structures, procedures and processes during the next fi nancial year. We consider these fundamental to the eff ective delivery of our dual mandate, as well as ensuring our company’s long-term sustainability.
The Board is committed to the principles of openness, transparency, integrity and accountability as advocated in the King IV Report on Corporate Governance for South Africa 2016 (King IV). This commitment to good governance is formalised in the company’s charters, policies and procedures.
The Board has fi ve committees which assist it to drive Sasria’s strategic mandate. These include the four statutory committees, namely the Audit Committee, Risk Committee, Remuneration and Nomination Committee and the Social and Ethics Commit-tee, as well as the Investment Committee (Figure 2).
Figure 2: Sasria’s corporate governance framework.
Currently, the Board of Directors comprises eight Non-Executive Directors, of whom seven are independent and one Executive Director, with the vacancy of the Finance Director position (Table 1). They meet minimum four times a year to provide strategic direction of the company.
Board members have been assigned committee responsibilities in accordance with the Public Finance Management Act No. 1 of 1999, Companies Act No. 71 of 2008, and the King IV Report on Corporate Governance.
Tabl
e 1:
Sas
ria B
oard
of D
irect
ors a
nd E
xecu
tive
Man
agem
ent (
as a
t 1 A
pril
2018
).
Init
ials
Tit
le &
su
rna
me
Fu
ll n
am
eG
en
de
r, a
ge
& r
ace
Co
mp
an
y &
tit
leT
itle
Sa
sria
Bo
ard
Oth
er
Bo
ard
pa
rtic
ipa
tio
n
Qu
ali
fi ca
tio
ns
Fie
ld o
f
ex
pe
rtis
e
Nu
mb
er
of
ye
ars
’
ex
pe
rie
nce
M.A
.M
r Sam
ieM
oham
ed
Adam
Mal
e(6
6)Co
lour
ed
Tim
esqu
are
Inve
st-
men
ts (P
ty) L
td(D
irect
or)
Non
-Exe
cutiv
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irect
or-C
ha
irp
ers
on
of
Sasr
ia B
oard
Me
mb
er:
-Ris
k Co
mm
ittee
-Inve
stm
ent C
omm
ittee
-Rem
uner
atio
n &
Nom
i-na
tion
Com
mitt
ee
Tim
esqu
are
Inve
stm
ents
(P
ty) L
td
Asso
ciat
e of
the
Inst
itute
of
Ris
k M
anag
emen
t SA
(IR
MSA
) 200
4Fe
llow
of t
he C
hart
ered
In
sura
nce
Inst
itute
197
8Fe
llow
of t
he In
sura
nce
Inst
itute
of S
outh
Afri
ca
1982
Insu
ranc
e, R
ein-
sura
nce,
Str
ateg
y &
Risk
Man
age-
men
t
45
S.H
.M
r Sch
oem
anSt
epha
nus
Her
man
usM
ale
(54)
Whi
te
Gua
rdris
k In
sura
nce
Gro
up(M
anag
ing
Dire
ctor
)
Non
-Exe
cutiv
e D
irect
or-C
ha
irp
ers
on
of R
isk
Com
mitt
ee-D
eput
y Ch
airp
erso
n of
Au
dit C
omm
ittee
Me
mb
er:
-Boa
rd
SAIA
, G
uard
risk
Bach
elor
of C
omm
erce
(U
nive
rsity
of P
reto
ria)
1983
Hig
her E
duca
tion
Dip
lom
a (U
nive
rsity
of
Pret
oria
) 198
4M
aste
r of B
usin
ess A
d-m
inis
trat
ion
(Uni
vers
ity
of P
reto
ria) 1
989
Insu
ranc
e, R
ein-
sura
nce,
Str
ateg
y &
Risk
Man
age-
men
t
31
R.M
r Mot
hapo
Rant
iM
ale
(36)
Blac
k
Actu
ary
and
Serv
ice
Entr
epre
neur
– M
at-
lotlo
Gro
up
Non
-Exe
cutiv
e D
irect
or-C
ha
irp
ers
on
of I
nves
t-m
ent C
omm
ittee
-Dep
uty
Chai
rper
son
of
Risk
Com
mitt
eeM
em
be
r:
-Boa
rd-R
emun
erat
ion
& N
omi-
natio
n Co
mm
ittee
Land
Ban
k In
sura
nce
Com
pany
Mor
uba
Cons
ulta
nts &
Ac
tuar
ies
Mat
lotlo
G
roup
(Pty
) Lt
d
Bach
elor
of E
cono
mic
Sc
ienc
e (U
nive
rsity
of t
he
Witw
ater
sran
d) 2
001
Bach
elor
of S
cien
ce (H
on-
ours
) (U
nive
rsity
of t
he
Witw
ater
sran
d) 2
002
Fello
w o
f the
Fac
ulty
of
Actu
arie
s 200
4Fe
llow
of t
he A
ctua
rial
Soci
ety
of S
outh
Afri
ca
2004
Actu
ary
& Q
uan-
titat
ive
Ana
lyst
; In
vest
men
t
15
Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019 | 1110 | Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019
Init
ials
Tit
le &
su
rna
me
Fu
ll n
am
eG
en
de
r, a
ge
& r
ace
Co
mp
an
y &
tit
leT
itle
Sa
sria
Bo
ard
Oth
er
Bo
ard
pa
rtic
ipa
tio
n
Qu
ali
fi ca
tio
ns
Fie
ld o
f
ex
pe
rtis
e
Nu
mb
er
of
ye
ars
’
ex
pe
rie
nce
J.M.
Mr N
air
Jaya
seel
an
Man
icku
m
Nai
r
Mal
e(5
4)In
dian
Nat
iona
l Tre
asur
y(A
ctin
g Ac
coun
tant
–
Gen
eral
)
Non
-Exe
cutiv
e D
irect
orM
em
be
r:
-Boa
rd;
-Soc
ial &
Eth
ics C
omm
it-te
e;-A
udit
Com
mitt
ee
N/a
Bach
elor
of C
omm
erce
Nat
iona
l Dip
lom
a in
G
over
nmen
t Fin
ance
Corp
orat
e G
over
-na
nce
35
B.J.
Ms M
kang
isa
Bule
lwa
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ieFe
mal
e(5
9)Bl
ack
Mka
ngis
a In
vest
men
t(E
xecu
tive
Dire
ctor
)N
on-E
xecu
tive
Dire
ctor
-Ch
air
pe
rso
n o
f Soc
ial &
Et
hics
Com
mitt
ee-D
eput
y Ch
airp
erso
n of
Re
mun
erat
ion
& N
omin
a-tio
n Co
mm
ittee
Me
mb
er:
-Boa
rd
Mka
ngis
a In
vest
men
t, Bo
sasa
, Zib
ula
Expl
orat
ion
Opi
mar
t, In
yand
a En
-er
gy, K
hang
ela
Phan
da,
Nta
mba
nane
Re
sour
ces,
Mas
ter i
n Ed
ucat
ion
for
Prim
ary
Hea
lth C
are,
Dip
(H
R)
Rein
sura
nce
20
M.O
.M
s Ndl
ovu
Mar
gare
t O
ctav
iaFe
mal
e(6
6)Bl
ack
Vulis
ango
Hol
ding
s(S
hare
hold
er)
Non
-Exe
cutiv
e D
irect
or-C
ha
irp
ers
on
of
Rem
uner
atio
n &
Nom
ina-
tion
Com
mitt
ee-D
eput
y Ch
airp
erso
n of
So
cial
& E
thic
s Com
mit-
tee
Me
mb
er:
-Boa
rd-In
vest
men
t Com
mitt
ee
Sim
mer
&
Jack
Min
es
Ltd,
Vul
isan
go
Hol
ding
s, Ri
te
Futu
re C
aree
rs
CC, K
agis
o So
lutio
ns (P
ty),
Bosa
sa O
pera
-tio
ns.
Bach
elor
of S
ocia
l Sci
-en
ce (U
nive
rsity
of t
he
Nor
th) 1
977
Man
agem
ent D
iplo
ma
(Lin
coln
Uni
vers
ity) 1
992
Stud
y of
Lea
ders
hip,
Au
thor
ity &
Org
anis
atio
n (T
avis
tock
Inst
itute
of H
u-m
an R
elat
ions
, Lon
don)
19
87
Hum
an C
apita
l39
Init
ials
Tit
le &
su
rna
me
Fu
ll n
am
eG
en
de
r, a
ge
& r
ace
Co
mp
an
y &
tit
leT
itle
Sa
sria
Bo
ard
Oth
er
Bo
ard
pa
rtic
ipa
tio
n
Qu
ali
fi ca
tio
ns
Fie
ld o
f
ex
pe
rtis
e
Nu
mb
er
of
ye
ars
’
ex
pe
rie
nce
T.M
s Mba
tsha
Tand
oFe
mal
e(4
4)Bl
ack
Indy
ebo
Cons
ultin
g(A
ssoc
iate
Dire
ctor
)N
on-E
xecu
tive
Dire
ctor
Me
mb
er:
-Boa
rd-A
udit
Com
mitt
ee-In
vest
men
t Com
mitt
ee
(Dep
uty
Chai
rper
son)
-Soc
ial &
Eth
ics C
om-
mitt
ee
Nex
ia S
AB&
TBa
chel
or o
f Com
mer
ce
(Uni
vers
ity o
f For
t Har
e)
1995
Mas
ter o
f Bus
ines
s Lea
d-er
ship
(UN
ISA)
201
0
Fina
ncia
l Man
age-
men
t?
M.T
.M
s Mou
tlane
Met
ja Ts
h-w
arel
oFe
mal
e(4
3)Bl
ack
Uba
nk(H
ead
of In
tern
al
Audi
t)
Non
-Exe
cutiv
e D
irect
or-C
ha
irp
ers
on
of A
udit
Com
mitt
eeM
em
be
r:
-Boa
rd-R
isk
Com
mitt
ee
Lion
of A
frica
In
sura
nce
Bach
elor
of C
omm
erce
(In
form
atio
n Sy
stem
s)
(Uni
vers
ity o
f Sou
th
Afric
a) 1
996
Bach
elor
of A
ccou
ntin
g Sc
ienc
e (H
onou
rs) (
Uni
-ve
rsity
of S
outh
Afri
ca)
1999
Char
tere
d Ac
coun
tant
(S
A)(S
AIC
A) 2
003
Fina
ncia
l Man
age-
men
tRi
sk M
anag
emen
tAu
ditin
g
?
C.M
.M
r Mas
ondo
Cedr
ick
Mnw
abis
iM
ale
(50)
Blac
k
Sasr
ia S
OC
Lim
ited
Man
agin
g D
irect
orSo
uth
Afric
an
Actu
arie
s D
evel
opm
ent
Prog
ram
me
(Cha
irper
son)
Bach
elor
of C
omm
erce
(E
cono
mic
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Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019 | 1312 | Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019
Init
ials
Tit
le &
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rna
me
Fu
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anag
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15
IT m
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t13
11. ORGANISATIONAL STRUCTURE
The company has an envisaged staff complement of 103 permanent positions (Figure 3) in six divisions (Table 2) for 2018-2019. Interns and temporary positions are not refl ected.
The Executive Management comprises the following:• Managing Director• Finance Director• Chief Risk Offi cer• Executive Manager: Governance & Company Secretariat• Executive Manager: Insurance Operations & Stakeholder Management• Executive Manager: Business Operations & IT• Executive Manager: Human Capital & Facilities
Table 2: Sasria’s business and functional structure for 2018-2019.
DIVISIONS DEPARTMENTS
Insurance Opera-tions
Underwriting Claims Reinsurance Marketing & Communi-cations
Customer Relationship Management
Finance Finance Investment Procurement
Governance & Company Secre-tariat
Compliance Legal Company Secretariat
Control Functions Internal Audit Risk Management Actuarial Services Quality Assurance
Human Capital Human Capital Facilities Corporate Social Investment
Business Opera-tions & IT
Project Manage-ment
Process Manage-ment
Information Tech-nology
The Underwriting, Claims, Customer Relationship Management and Actuarial Services departments represent the core functions of Sasria.
Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019 | 1514 | Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019
Figu
re 3
: Sas
ria’s
orga
nisa
tiona
l str
uctu
re fo
r 201
8-20
19.
Figu
re 4
dep
icts
the
num
ber o
f sta
ff (c
apac
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er c
apab
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gro
upin
g in
the
2017
-201
8 fi n
anci
al y
ear a
s w
ell a
s th
e 20
18-2
019
fi nan
cial
yea
r. Th
e m
ajor
ity o
f the
incr
ease
in
capa
city
wer
e in
the
Clai
ms-
and
IT fu
nctio
ns.
Figu
re 4
: Sas
ria’s
capa
bilit
ies/
capa
city
cata
logu
e
Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019 | 1716 | Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019
12. FINANCIAL RESOURCES INCOME
Sasria holds a legislative monopoly on the sale of its current product and its assured source of revenue is through insurance premiums payable by policyholders. Sasria cover is not compulsory, the policyholder has to elect to include our product.
The other source of income is investment income. Asset allocation and benchmarking according to the company’s risk profi le is determined by the company’s Investment Committee, Risk Committee and the Board, which as a targeted return requires investment performance returns equal to Consumer Price Index, plus an allocated percentage of 2% over a three-year rolling period.
13. RISK MANAGEMENT
The Risk Appetite Policy and Risk Strategy was fi rst developed and approved by the Board in 2012. The policy was reviewed in March 2017 in accordance with the FSB Solvency Assessment and Measurement (SAM) regime, and the nature of Sasria’s business. The Risk Appetite Framework (Framework) document provides details for development and application of the risk appetite as referred to in the Enterprise Risk Management Policy.
Enterprise Risk Management (ERM) enables management to eff ectively deal with uncertainty and associated risk and op-portunity, enhancing the capacity to build value.
Eff ective risk management is crucial to the company’s continued growth and success and this can only be achieved if all three elements of risks – namely threat, uncertainty and opportunity – are recognised and managed accordingly.
Through executing its business strategy, Sasria is exposed to a range of risks which need to be managed within its risk ap-petite and tolerances. This assists the Board and Management in achieving its business goals and objectives.
Sasria aims to align strategy, processes, people and technology for the purpose of evaluating and managing the uncertain-ties that are faced by the company.
Value is maximized when management sets strategy and objectives to strike an optimal balance between growth and return goals, and related risks, and effi ciently and eff ectively deploys resources in pursuit of the entity’s objectives.
ERM policies and processes are updated on a yearly basis to include new legislation and regulatory requirements (espe-cially regarding SAM). The policies form part of Sasria’s governance framework.
13.1 Enterprise Risk Management process
Processes are implemented to ensure all aspects and categories of risks are identifi ed, assessed and monitored and that risks are managed within the risk appetite.
Risk identifi cation, risk assessment and management are fundamental components of the business, in planning the com-pany’s future and executing its strategy. Internal fi nancial and other controls ensure a focus on critical risk areas, which are closely monitored and are subject to management oversight and internal audit reviews.
In ensuring that the risk universe is complete as much as possible, the risk management value chain is used across all divi-sions within Sasria.
The following are the elements of the risk management value chain:
13.1.1 Identifi cation
Risk workshops are facilitated by the risk function annually for the identifi cation of risks, risk drivers and the taxonomy. The sources of risks are obtained from strategic objectives, process fl ows, internal and external loss data, policies and processes, previous internal and external audit reports, previous risk registers (Risk and Control Self-Assessment results) and regula-tory reports.
13.1.2 Assessment
Once the risks are identifi ed, they are assessed in accordance with the company’s Risk Assessment matrix which articulates the likelihood and severity impact. The impact assessment defi nes impact into four categories namely- fi nancial, reputa-tional, stakeholder and customer. The impact is rated on a scale of 1 to 5, with 1 being insignifi cant and 5 being signifi cant. Whereas the likelihood of the event occurring is rated on a scale of 1 to 5, with 1 being unlikely and 5 almost certain.
13.1.3 Mitigation
Controls for each of the risks are identifi ed. Where controls are found to be inadequate and/or ineff ective, actions to im-prove controls are identifi ed to further strengthen them and reduce residual risks to an acceptable level. The controls are assessed for adequacy and eff ectiveness, considering the design of the control in question and whilst determining how well the control should function in practice when applied and implemented consistently across the division. Control eff ec-tiveness refers to the operating effi ciency of the control in question and is assessed by determining whether the control is operating as intended, and has been in place at all times, and whether it has been applied consistently across the division or the company.
13.1.4 Monitoring
The risks are monitored monthly by the risk function with the risk champions in the diff erent divisions, and on a quarterly basis by the Chief Risk Offi cer and the Executive Manager of each division.
13.1.5 Reporting
The risk function reports on the risk activities to the Risk Committee on a quarterly basis.The Internal Auditors annually perform risk-based audits throughout the organisation and give assurance on the overall eff ectiveness of controls.
13.1.6 Risk strategy
Sasria’s Board of Directors and Management are aware of the implications that strategic decisions have on the risk and overall capital needs of Sasria, and encourage careful consideration of whether such strategic decisions are desirable and aff ordable.
13.1.7 Risk appetite
Sasria’s risk appetite is the amount of risk that Sasria is willing to accept in pursuit of shareholder value and the attain-ment of strategic objectives. The risk appetite framework is embedded in key decision-making processes and supports the implementation of the company’s strategy. This is used to maximise returns without exposing the company to risk levels above its appetite. The risk appetite framework assists in protecting Sasria’s fi nancial performance, improves management responsiveness and debate regarding the risk profi le, assists executive management in improving the control and coordi-nation of risk-taking across business divisions, and identifi es available risk capacity in pursuit of profi table opportunities.
Measure 1: Capital at Risk
Sasria will at all times hold suffi cient eligible fi nancial resources to ensure it meets the relevant statutory solvency capital requirement, as well as its internal (economic) assessment of the capital required to deliver on its business plans, reason-able policyholder expectations and claim payments as they fall due.
The minimum capital requirement will be the greater of the Economic Capital at Risk (ECR) and the Solvency Capital Re-quirement (SCR) limits.
Appetite SCR % ECR %
Target 230% 230%
Threshold 150% 150%
Limit 130% 130%
Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019 | 1918 | Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019
Sasria developed an economic capital model for the calculation of the Economic Capital at Risk. The model simulates attri-tional, large and catastrophic losses separately. The model is currently only used for internal reporting purposes on the risk appetite measure (capital at risk) and has been used for Sasria’s Own Risk and Solvency Assessment (ORSA).
Measure 2: Earnings at risk
Sasria defi nes Earnings at Risk (EaR) as the diff erence in actual EBITDA compared to the budgeted EBITDA:
Appetite % of EBITDA
Target 5%
Threshold 10%
Limit 15%
Measure 3: Operational risk
Sasria operates at a high standard regarding the management, prevention and mitigation of losses caused by operational risk events. It has a low tolerance for operational risk but recognises it represents a cost of doing business.
Appetite Million
Target R 0
Threshold R 2
Limit R 10
13.1.8 Key risk indicators & triggers
We aim to manage our risk profi le in a proactive way. To support this, key risk indicators (KRI) and triggers have been es-tablished during the year. The KRI were developed to act as early warning signals in the event that one of the scenarios or stress situations may materialise. The indicators and triggers are monitored routinely and considered by the Risk Commit-tee with any breaches in the limits communicated to the Board.
13.1.9 Top risks
The table of the top 10 key risks is attached in Annexure 3. The Chief Risk Offi cer and Risk Manager meet with the risk champions from each business division on a monthly basis. Quarterly meetings are held with the Executive Managers of all divisions. The following issues are discussed and reviewed during the monthly and quarterly meetings:
• The division’s risks• Assessment of risks based on likelihood and impact• Eff ectiveness of the controls• Movement in risks, changes made to risks and new risks• Actions required to be addressed per risk• Changes in the industry and business division• New contracts entered into by the division• Review of risk ratings• Discussions on monitoring and review of risks• Emerging risks in the department, division or companyDiscussion regarding the achievement of strategic objectives.
13.1.10 Own Risk and Solvency Assessment
The Own Risk and Solvency Assessment (ORSA) as defi ned by the FSB, is the entirety of processes and procedures em-ployed to identify, assess, monitor, manage, and report the short and long term risks an insurance undertaking faces or may face. It also defi nes the process to determine the own funds necessary to ensure that insurers’ overall solvency needs are met at all times and are suffi cient to achieve its business objectives.
The regulatory balance sheet is currently projected once a year as part of the ORSA stress testing and risk budgeting process. Projected regulatory capital requirements are considered together with the risk appetite, to ensure that Sasria’s business is managed within the risk appetite on an ongoing basis.
A key part of Sasria’s ORSA process is to evaluate the potential adverse impact to the current and future fi nancial condition of the company resulting from changes to key risk factors from unexpected events.
Sasria submitted its second ORSA report during September 2017 to the FSB. Sasria is currently in the process of further embedding the ORSA process into the business for the next business cycle, and preliminary ORSA results which are based on the fi nancial budget for the business planning period were submitted to the Risk Committee during November 2017.
14. ANALYSIS OF COMPETENCIES & ENVIRONMENT
14.1 Current competencies & resources
Sasria’s current competencies and resources comprise the following:
• A core staff with specifi c and intricate knowledge and experience in the structure of provision and administration of special risk insurance as defi ned in the Reinsurance of Material Damage and Losses Act.
14.2 Environment within which Sasria operates
14.2.1 Regulatory
• Sasria SOC Limited is established in terms of section 3 of the Conversion of Sasria Act No. 134 of 1998. It is also a National Government Business Enterprise listed in Schedule 3B of the Public Finance Management Act No. 1 of 1999, and a registered Short-Term Insurance company operating in the fi nancial services sector overseen by the FSB.
• Sasria operates under a legislated monopoly aff orded by the Reinsurance of Material Damages and Losses Act No. 56 of 1989, read in conjunction with the Conversion of Sasria Act.
• As a state owned company, Sasria is also governed by the Companies Act No. 71 of 2008 and the Public Finance Management Act No. 1 of 1999.
• Like other insurance companies Sasria will be aff ected by a number of new laws that have already commenced or will potentially commence in 2017/2018. These include Protection of Personal Information Act (PoPI), the Financial Sector Regulation Act (Twin Peaks), new King IV Code and others. All these are aimed at enhancing governance and to protect customers. While these regulatory developments are welcome they will also bring about certain fi nancial and risk implications for the organisation that will require strengthening of the governance and compliance re-sponse functions.
• Financial Sector Regulation (FSR) Act – In terms of this Act Sasria will: - Have to apply for a new license in terms of this Act. - Be reporting to two regulators, namely Prudential Authority (under South African Reserve Bank) and Financial
Sector Conduct Authority. - Be obliged not to provide fi nancial product or fi nancial service except in accordance with a licence in terms of
a specifi c fi nancial sector law. Finance sector law includes the Short Term Insurance Act and Financial Advisory and Intermediary Services Act, which requires one to be duly licensed in order to conduct insurance/fi nancial services business.
- Have an obligation to fi nancial institutions to report on contraventions with any fi nancial sector, law, directive, enforcement undertaking, court order, etc.
- Have to note that the responsible authority is empowered to suspend a license if there is contravention with licensing conditions or fi nancial sector laws.
- Have to note that the licence may be revoked if it will be in the best interest of fi nancial customers or would frustrate the object of fi nancial sector laws.
- Have to disclose that it holds a license in all business documentation. - Have to ensure compliance as non-compliance with the Bill is a fi ne not exceeding R15 000 000 or imprisonment
for a period not exceeding 10 years.
Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019 | 2120 | Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019
• King IV – In terms of King IV Sasria:
- Will include references to King IV in the Shareholder Compact. - Will review the letter of appointment of Managing Director to check if it is in line with the recommendations of
King IV. - Will have to ensure ongoing engagement with National Treasury on Treasury’s needs and expectations as a
shareholder. - Will ensure that all shareholder resolutions are done in line with the King IV Code. - Will ensure that its governing body (board) adheres to the recommendations of King IV. In this regard all Board
and Board Committee charters have been reviewed against King IV requirements and updated where required. - Will ensure that the ethical tone is set at the top and the board should ensure that they conduct themselves in
an ethical manner both in their personal and collective capacity. - Ensure that King IV principles of technology governance and reporting is adhered to.
14.2.2 Economic
• As a consequence of its exclusivity, Sasria has no direct competitors in South Africa. The BMI South Africa Insurance Report (Q4/2017) forecasts that the South African non-life segment will grow its gross written insurance premium y-o-y by 5.5% in 2017, 6% in 2018 and 6% in 2019. The non-life market in South Africa is expected to record steady growth over the forecast period through to 2021, though the sector will continue to lag in annual % growth terms. In infl ation adjusted terms, growth in the short term sector will be close to zero for at least the next year or so, in the context where key segments of this sector are sensitive to economic cycles and Gross Domestic Product (GDP) growth will remain very sluggish.
• Growth in South Africa’s non-life sector is heavily dependent upon the growth trajectory of the South African economy. South Africa’s real GDP growth will accelerate gradually in the years ahead, weighed down by structural headwinds from a challenging operating environment and low commodity prices. Elevated unemployment and a pullback in government spending on subsidies, transfers and wage hikes will tamper the pace of private consump-tion growth in the years ahead. Private consumption is expected to account for 60.9% of GDP by 2026, up from 59.5% in 2016.
• Government spending will grow as a share of overall GDP in the years ahead, as government struggles to sharply pare back spending, South Africa’s fi xed investment will remain relatively subdued in the coming years in the face of tepid foreign and domestic investor sentiment. Sporadic industrial actions, the recent investor unfriendly policy proposal and high operating costs will tamper fi rms’ enthusiasm for operating in the country in the coming quarters.
• BMI Research has revised real GDP growth forecast for 2017, from 1.0% to 0.7%1.• Sasria is subject to the vagaries in the international reinsurance markets as it has to purchase adequate reinsurance
cover. Recent natural disasters and acts of terrorism across the globe are key drivers of catastrophe reinsurance rates. Currently, global reinsurance capacity is in over supply and Sasria is expected to benefi t from this oversup-ply. Sasria will use this oversupply to adequately protect itself against volatility without having to incur a signifi cant increase in reinsurance costs.
• With more than 90% of all debt issued in rand, a downgrade to South Africa’s local currency debt rating would have signifi cant knock-on eff ects on the country. It could prompt a sharp currency sell-off , prompt further rand weakness, and weigh on business confi dence and ramp up government and private fi rms’ borrowing costs2.
• The country is further impacted by global volatility, a slump in commodity prices and weak business and consumer confi dence. Consumer price infl ation is within the Reserve Bank’s target range of 3% to 6% in 2017. This is mainly at-tributable to expected rainfall forecasts, which has driven food prices to stabilise to a moderate level in comparison to 2016 where the economy was impacted by severe drought conditions and the increase in energy tariff s. SARB has noted the medium term infl ation outlook has improved to 5.3% in 2017, 4.9% in 2018 and 5.2% in 2019 in consid-eration of the recent exchange rate appreciation, normalisation of weather patterns, which will aff ect the agricul-ture sector positively, and the interest rate cycle that will stimulate economic growth. A low infl ation rate forecast supports economic growth as it helps to reduce interest rates over time, which creates growth, sustains jobs and encourages long term investing.
• South Africa’s growth expectations have been materially marked down induced by deep-rooted structural prob-lems, political uncertainty and a high unemployment rate. SARB in its economic growth forecasts expects SA’s economy to accelerate by 0.5% in 2017, 1.2% in 2018 and 1.5% in 2019. SARB has raised its concerns over consumer and business confi dence with the latter falling to its worst level since the 2009 recession. Domestic growth pros-
1 BMI South Africa Country Risk Report Q4 20172 BMI South Africa Country Risk Report Q4 2017
pects have deteriorated, as the impact of the ratings downgrades is expected to weigh on domestic investment and consumer sentiment.
• To generate infl ation beating returns over the long term, Sasria must take a balanced approach to risk. Being too conservative is detrimental to long-term wealth creation due to the eff ect of infl ation eroding the real value of capi-tal. Sasria’s current asset allocation includes exposure to growth assets being equities, which have proven to yield higher returns over the long term.
• Following a pessimistic approach (worst-case scenario), a CPI growth of -0.4% is expected, based on the South Africa’s low growth environment and the country offi cially entering into a technical recession. The possibility of a local currency downgrade by rating agencies looms heavily over the economy with concerns raised over weak growth prospects, trade defi cit and the institutional frameworks, which have become less transparent with policymakers’ previous commitments becoming less certain.
• South African markets, like most other emerging markets, are driven by excess liquidity and to some extend inves-tor sentiment. Local markets are extremely vulnerable to a decrease in liquidity. Signifi cant downside risk exist in the South African markets. Sasria’s strategic asset allocation is designed cognisant of these risks. The allocation relies heavily on short-dated cash and near-cash instruments. The strategy is very defensive but will ensure that capital is preserved in real and nominal terms.
14.2.3 Socio-economic
Terrorism
• The Institute for Security Studies has identifi ed South Africa as a high-priority target for terrorist networks across the continent. SA has also been dubbed a ‘top 10 target’ following a spate of terrorist incidents in the last decade that have claimed victims from our country. At least 50 South Africans have been killed, kidnapped or injured by terrorist groups operating in Mali, Yemen, Somalia, Nigeria, Syria and Iraq since 20103.
Unemployment
• South Africa’s unemployment in the third quarter of 2017 increased by 1.2 of a percentage point to 27.7% - the high-est fi gure since September 20034.
• We expect the income gap to widen between the poor and the rich, and political risk will remain elevated, resulting in frequent protests. The gap between the unemployment rate envisaged in the National Development Plan (14% by 2020) and the current rate is also widening.
Service delivery protests
• A record peak in the second quarter of 2017 may mean that 2017 will eclipse other years’ records for service delivery protests, although a downward trend since May could keep it under 2014’s current record. As at the end of Septem-ber 2017, service delivery protests accounted for 11% of service delivery protests recorded since 20045 (Figure 5).
• Gauteng has been the most prominent site for service delivery protests this year; accounting for more than one out of every three protests.
• Other protest-affl icted provinces for the year include the Eastern Cape, KwaZulu-Natal and the North West. Together the four provinces account for three-quarter of protests recorded in 2017 (Figure 6).
3 The Municipal IQ. Published 2017-07-28. https://www.thesouthafrican.com/south-africa-has-become-a-top-10-target-for-terrorist-groups-iss/4 Daily Maverick. Published 2017-06-01. https://www.dailymaverick.co.za/article/2017-06-01-sa-unemployment-rate-rises-to-14-year-high/#.
WhKeh2YUmWs5 Municipal IQ. 2017 service delivery protests in a high range, but downward trend from May peak – for immediate release. Press release 24
October 2017.
Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019 | 2322 | Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019
Figure 5: Major service delivery protests, by year (2004 – YTD 30th September 2017).
Figure 6: Service delivery protests by province 2017 (as of 30th September 2017).
• Service delivery protests will continue to be a main driver of Sasria claims in 2018-2019. Violent protest activity remains a concern for many South African communities given its adverse impact on schooling, work opportunities and community safety. It is of further concern that policing of protests appears to add another layer of violence, further destabilising the already vulnerable relationship between communities and authority fi gures.
Student protests
• #FeesMustFall at Wits was at the centre of the whole movement and in 2015 major gains were achieved, with the highlight being the 0% fee increase. The movement also brought to the table the debate around free higher educa-tion. The 2016 movement at Wits, although not as successful as it was in 2015, was more about challenging the status quo and was centred around the decolonisation of the university rather than on fees. The decolonisation proj-ect that the movement has started at Wits is an important one, as it seeks to highlight some of the structural issues at the university, most notably the marginalisation of black and African experiences in the curriculum and in how things are done at the university. Black students are forced to assimilate rather than being included in the university.
Decolonisation will not be realised in a day but the fact that it is back on the table has ushered in a new era in terms of how the university does things. Changing the demographics of the student body alone does not mean that the university is decolonised. More needs to be done to ensure that black students and staff feel that they are a part of the university6.
• As universities prepare to announce fee increases for 2018‚ a swirl of unrest is engulfi ng some campuses as students speak out against the proposed increments7.
• Student protests are the cause of a signifi cant rise in Sasria claims and this trend is set to continue in the next fi nan-cial year.
14.2.4 Technological
• In the past Sasria was a “late adopter” on the technology adoption curve. Sasria will close the technological gap over the next three to fi ve years.
• With the desire to be more effi cient and reach a wider market as well as the unreached market, Sasria will use tech-nology as a strategic enabler.
15. STRATEGIC FOCUS AREAS & STRATEGIC OBJECTIVES
Sasria’s goal in the next three years is to ensure that it: remains a professional and effi cient company; establishes itself as a thought leader in the special risk space; is innovative in terms of its product off ering to achieve National Treasury’s and the Financial Services Board’s objectives of fi nancial product inclusivity; while remaining sustainable.
To achieve the above, the strategic direction (purpose) Sasria has chosen for the next year is focused on Sustainable growth, Effi ciency, Customer centricity and Social impact (Figure 7).
Figure 7: Sasria’s strategic direction.
This will be achieved by:• Conducting a feasibility study into additional distribution channels, to reach previously unreached markets to en-
sure fi nancial inclusion of all South Africans.• Leading from the abovementioned, to develop tailor-made LSM & SME products.• Partnering with other companies already active in the LSM & SME space.
6 #Hashtag: An analysis of the #FeesMustFall Movement at South African Universities. Africa Portal. https://www.africaportal.org 7 Times Live. Is this the start of Fees Must Fall protests? Published 25 October 2017. https://www.timeslive.co.za/news/south-africa/2017-10-25-is-
this-the-start-of-fees-must-fall-protests/
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• Remaining customer focussed in all business operations, by ensuring that service delivery is enhanced through more eff ective processes.
• Increasing Sasria’s brand and product awareness within the distribution channels as well as end-customers.• Attracting and developing the talent required to execute our strategy.• Ensure alignment of the organisation to its future expansion strategy through the Enterprise Architecture Frame-
work and IT Strategy.
15.1 Sustainable revenue growth
Sustainable revenue growth will be achieved through the following strategic objectives: - To consistently outperform the industry average in premium growth; and - To improve our current strategic partnerships and establish new ones.
These two strategic objectives will be achieved through embedding a strategic stakeholder management approach that is focused on the high income generating distribution channel and high income generating customers. This will be done through brand and product awareness to the target audience, technical support and product training to the distribution channel. Furthermore focus will be given to maximise the current product off ering to existing customers as well as taking the current product off ering to new markets.
The focus on the distribution channel will enable eff ective selling of our product by the distribution channel on our behalf as well as eff ective advice giving and engagements with end customers during underwriting. The focus on end customers is to empower them with the knowledge on special risks in order to create demand for our product.
15.2 Capital management
The following strategic objectives will support the capital management strategic focus area: - To ensure compliance with statutory capital requirements and the calculation of an economic risk basis for capi-
tal value; and - To target a return on equity greater than the government bond yield.
During the 2018-2019 year Sasria will continue to implement the FSB SAM requirements to ensure compliance with statu-tory capital requirements, with the continued focus on the embedding of the ORSA methodology and processes, the paral-lel runs (of the economic capital models and the Solvency Capital requirements. It will further continue to improve on its calculation of an economic risk basis for capital value.
Sasria aims to optimise its return on capital by growing its insurance premium income, managing expenses, yielding a return of CPI + 2% on investments over a three year rolling basis and buying suffi cient reinsurance cover to supplement its current capital, to cover potential maximum losses as per the annual probable maximum loss (PML) study conducted.
15.3 Innovation (products & services)
Sasria will support sustainable business growth through the following strategic objectives: - To become a centre of innovation in special risk insurance;
- Research, benchmarking and best practice. - To conduct feasibility studies for new products; and - To establish new business distribution channels.
Refer to the section “Beyond 2020” for more detailed explanation on the initiatives to be undertaken.
15.4 Infrastructure & cost management
The following strategic objective will supports the strategic focus area: - To optimally enable business while satisfying regulatory requirements.
- Systems/processes/procedures/productivity/knowledge management.
Sasria’s cost management is tightly controlled and all infrastructure spent is governed by Board oversight. Over the me-dium term operational and capital expenditure is expected to increase above CPI in order to deliver on its fi ve year strategy plan as well as the Government’s broader expectations of Sasria.
Sasria is embarking on an IT digital strategy and Enterprise Architecture (EA) Framework to ensure that it is aligned with the company’s future strategy. The EA review will deliver an Architecture Vision (defi ning the future vision and buy-in), Business Architecture (understanding the business; defi ning future business), Information Systems Architecture (defi ning applica-tion and data requirements), as well as a Technology Architecture (defi ning requirements in terms of platforms, software, security and tools).
15.5 People, capacity and capability
The following strategic objectives will support the strategic focus area: - To attract, retain and develop skills that support our aspirations; and - To maintain a high-performance culture.
- Skills development/ incentivisation/ talent management/ professionalism/terms & conditions of employ-ment/ performance management/ employer value proposition.
In 2018-2019, the Human Capital department will facilitate recruitment for all vacant positions, ensure suffi cient staff devel-opment plans are in place, facilitate the implementation of identifi ed initiatives for key talent, and drive succession plan-ning, while it continues to drive performance-based outcomes within the organisation.
Sasria also realises that it needs to help build capacity outside the organisation and in support of the NDP. Sasria supports education of the youth by contributing to school infrastructure projects, sponsoring bursaries and intervention programs.
15.6 Regulatory environment
The following strategic objective will support the strategic focus area: - To proactively manage compliance.
- Compliance management/legal services/risk management.
The implementation of SAM policies and processes will continue in the 2018-2019 in anticipation of the regime’s imple-mentation date of July 2018, to accommodate the legislative timeline for the Insurance Bill enactment. The Financial Sector Regulation Act No. 9 of 2017 (FSR Act) was processed by Parliament ahead of the Insurance Bill. This enables the Insurance Bill to build on the regulatory framework created through the FSR Act. The Insurance Bill, tabled in Parliament in January 2016, is currently being considered in Parliament and is expected to be processed during the second half of 2017 and pos-sibly also the fi rst half of 20188.
15.7 Customer-centricity
The following strategic objectives will support the strategic focus area: - To provide relevant and appropriate products; and - To provide superior service.
Claims settlement turn-around time and communication is central to the customer centricity theme. The Claims Depart-ment aims to settle 90% of all fast-track claims within 30 days in the 2018-2019 year. The department aims to accept liabil-ity on 70% large losses within 60 days (from the date of submission).
15.8 Brand development
The following strategic objective will support the strategic focus area:
- To create a trusted brand that resonates with all our customers. - Loyalty/recognition/association/visibility/advocacy – fi rst commercial & corporate, then the end-consumer.
8 Solvency Assessment and Management (SAM). September 2017 Update. Published 1 September 2017. https://www.fsb.co.za/Departments/insur-ance/Documents/SAM%202017%20Update.pdf
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The elevation of the Sasria brand will continue to be focused on the big income generating agents and brokers, corporate and commercial customers, as well as creating internal brand appreciation. Further brand building to the end consumer will be enhanced via consumer education and awareness initiatives.
This will be achieved through the following:• Keeping abreast with market trends as well as developments within the environment in which we operate• Collaborative and relationship marketing with all strategic stakeholders• Elevation of the brand and product awareness to the end-customer• Developing sustainable relations with media partners• Eff ective communication with all stakeholders and• Elevate brand and product awareness.
An integrated marketing and communications approach will be utilised to achieve the above via an “always on” media approach. This, together with a clearly defi ned brand positioning, will enable the Sasria brand to move from an indiff erent brand to become a top-of-mind brand within the stakeholders segments.
16. BEYOND 2020
Sasria has started its journey to identify areas of focus for the strategy beyond 2020. These areas of focus provide opportu-nities to various stakeholders and specifi cally address the risks that the government, insurers and Sasria face.
Our process in identifying the areas of focus or opportunities was based on the risks that are currently faced by the organ-isation, risks which the industry is facing and risks that the government is facing.
In the world where climate change and its impact is a reality, the frequency and severity of disaster is increasing. Special risks, if not adequately addressed, pose a major risk to the economy of the country and also to the attainment of the NDP goals. The impact of special risk is not just economic and social but these risks further pose signifi cant food security risks to the country. They also pose an escalating threat to the three main problems facing South Africa, namely poverty, inequality and unemployment.
Government is the reinsurer of last resort; its citizens expect the Government to intervene and help the citizens in the event of a disaster. Public-private partnerships are crucial in making sure that the country builds fi nancial resilience to withstand any special risk disaster.
Based on the above it can be concluded that the government is currently facing various challenges, which include:• Special risks (as indicated above)• Poverty and inequality• Limited skills capacity and capability• Lack of transformation and inclusive growth
Sasria has started the journey to address these challenges and achieve specifi c objectives which include:• Stimulation of inclusive economic growth• Building of skills and capacity• Protecting South Africans against all types of Special risks• Support of the NDP
The focus areas and opportunities which we have identifi ed to achieve these objective and mitigate the risks are the fol-lowing:• LSM/SME feasibility project• Agriculture insurance administration project• Enterprise Architecture project• Transformation projects:
- Incubation programme - IFRS17 project
16.1 LSM/SME feasibility project
The market failure in delivery of insurance products to the vulnerable communities in South Africa, present one of the highest risks facing government in terms of risk exposure. Coupled with the high unemployment rate, lack of basic services and poverty facing many, the tension gives rise to incidents of protests – with a high probability that violence might lead to further losses which are not covered by general insurance. These losses place additional burden on the local municipali-ties and government.
It was noted that various insurers adopted varying approaches that either support their own business strategies or mere compliance. There are currently fi ve insurers who have products tailor made for the LSM 1-6. The products off ered by these insurers do not entirely meet the requirements by generic standards. Each product is designed to meet the strategic requirements of the various organisations. Other companies have now developed products for the SMEs as well, however, as with the personal lines products, these products do not fully meet the generic standards.
It can be concluded that there is a need for Sasria to develop a product for the target audience.
It is proposed that a phased approach be adopted. The fi rst phase should focus on addressing the existing products by underlying insurers to meet the needs of the target audience as well as focusing on understanding the existing alternative distributors of insurance to the target audience. The second phase should focus on designing a standalone product for special risks in line with the needs and lifestyle of the target audience and the BBBEE requirements, a detailed analysis of how the product will be distributed in order to reach the entire spectrum of the target audience. This will also include a de-tailed analysis of establishing a separate company, fi nancial analysis, analysis of risks and benefi ts, and a resource analysis.This is highlighted in more detail below:
Phase 1 - SME Phase 2 – Lower LSM Phase 3 – Vulnerable Communities
Product Design Sasria “limited” commercial product
Sasria “Standard Personal Asset Cover” stand-alone
Disaster Cover for Floods and Fire and including Sasria Standard cover
Distribution Digital application promot-ed by Field Agents
Digital application promot-ed by Field Agents
Agent model
Retail model
Master policy linked to Social Grant
The objective is to reach the uninsured market in a cost eff ective manner and ensuring access to Sasria, while allowing for new alternative distribution models to be explored; and creating previously unreachable markets to the agent companies and increasing insurance penetration.
The product principles for each of the designs and or phases are displayed in more detail below:
Phase 1 - SME Phase 2 – Lower LSM Phase 3 – Vulnerable Communities
Product Principles Aff ordability Accessibility Consumer education
Aff ordability Accessibility Consumer education
Sustainability
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The proposed high-level Phase 1 timeline is as follows:
The project delivery is governed by two committees - a Steering Committee and a Working Committee (WorkCom) with further support from a dedicated Project Manager and Business Analyst. The members of the WorkCom are made up from various representatives of the diff erent business units within Sasria.
Steering Committee WorkCom Project Offi ce
Executive Committee Interdepartmental support team Project Manager
Business Analyst
Market research have been conducted including live surveys in each province.
The success of the distribution is dependent on the acquisition of a robust digital application that allow for instant access to Sasria products. The SMEs will be directed to the platform by fi eld agents from the communities who will be acting as product ambassadors. This will allow for on the ground consumer education and brand building while creating a platform for these agents to enter the market. Servicing and client queries will be outsourced at an external contact centre at a lower cost as we only require limited contact centre assistance.
The Enterprise Architecture project (per 16.3 below) will incorporate the claims processing technology that will allow the Sasria claims team to have end-to-end control of directly registered claims.
The alternative distribution channels are:
Sasria’s current location is adequate for managing the new initiatives. Technologically driven solutions will allow for straight through process handling of claims. Field agents will be contracted via an outsourced platform utilising existing market operators such as INSETA at no additional cost to Sasria.
Initially the digital solution can be sourced through an outsourcing process on a proof of concept basis. There are a number of solutions available in the market with new innovative solutions presented to insurers.
The IT department will perform a feasibility exercise on the various options available and procure the best fi t solution. The solution will include on-line purchase, administration and claims processing capabilities.
In compliance with the PoPI Act, all client information collected and stored will be secured in the digital platform technol-ogy solution.
Phase 1 and Phase 2 of the project does not require any additional mandate or changes to the existing mandate.In order to proceed with Phase 3 – an additional mandate will be required to allow for Sasria to off er natural disaster cover to the vulnerable communities.
Capital requirements and operating cost models are planned to be completed by February 2018 for board approval. A budget of R5m has been allocated towards the project for the 2018-2019 fi nancial year.
16.2 Agriculture insurance administration project
There are certain uninsurable risks that are facing government which are also very volatile. In the past year SA, has experi-enced its worst drought followed by fl oods in various regions. These are expected to continue. Drought is especially aff ect-ing commercial farmers and subsistence farmers. The risk of market failure for the government is therefore high.
The government of South Africa has recognized the impact of weather and climate shocks on agricultural producers and the challenges they pose to the country’s development objectives in terms of food security and rural development.Drought, fl ooding, and storms are key weather risks in South Africa with drought-related losses as the most signifi cant over the period 1980 to 2013, accounting for 42 percent of losses in South Africa.
Disaster spending by the Government between 2009 and 2015 confi rms the signifi cant impact of fl ooding and drought. Sixteen fl ooding disasters and twelve drought disasters were declared during this period.
Only three out of the 81 general insurers in South Africa off er crop and livestock insurance products. In addition to Swiss Re, which has provided reinsurance, only two of the six locally incorporated reinsurers provide reinsurance capacity for the crop and livestock insurance market. The market has experienced signifi cant contraction in the last number of years.Multi-peril crop insurance (MPCI) underwriters have incurred negative underwriting results in six of the past 11 years. These MPCI underwriting results are unsustainable and the MPCI product is likely to be withdrawn from the market in the next few years unless results can be improved.
The restricted supply of MPCI is severely aff ecting insurance penetration among commercial grain producers, approxi-mately 80 percent of whom do not purchase cover, as it is not fi nancially sustainable given their margins. The restricted supply of MPCI is also impacting negatively on commercial banks’ seasonal lending to grain producers. Banks, who had become accustomed to accepting an MPCI policy as collateral for their loans, are declining to extend credit to farmers who no longer have MPCI protection, and who cannot off er adequate balance sheet protection.
Agricultural insurance is one of a range of agricultural risk management solutions, which include mitigation, coping and transfer measures. Recent conditions in South Africa have heightened the focus on agricultural insurance as a potential intervention.
As a result the country and specifi cally the government are facing the following challenges:
• Lack of inclusive economic growth• Lack of economic transformation
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• Increase in natural disaster due to climate change (water, drought, etc.)• Worsening of social problems i.e. poverty and income inequality• Food security in times of drought• Sovereign credit downgrade.In addition, the insurance industry is facing risks such as:• Increase in natural disasters due to climate change• Lack of transformation• Slow growth or lack of premium growth• Lack of or low insurance penetration• Skills shortage• Delays in regulation and legislation.
Sasria will assist the State to fi nd solutions to allocate funds on behalf of government, to mitigate against the losses due to drought for commercial, emerging and subsistence farmers. In the long and short term, the intervention will assist in food security, transformation, the increase in insurance penetration and the sustainability of insurers and the agriculture sector.
A public, private partnership (PPP) will be created to ensure that all parties in the PPP benefi t from the arrangements and are committed to the project. The partnership will be possible by adding a special vehicle entity, which will assist in the administration of the PPP and will receive funds from the government and allocate these funds to the insurers for subsidiz-ing of the premiums relating to multi-peril crop insurance. The administration company will be ring fenced and no profi ts or losses will be made in the company. The proposed value chain is as follows:
The following principles and objectives are key to the outcome of the project:• Aff ordability of the proposed insurance product(s)• Accessibility and availability of funds during disasters• Accessibility of agriculture insurance to all farmers• Sustainability of agriculture insurance• Effi ciency and impact:
- Effi ciency in management and control of government funds - Education - Seamless and timely claims management - Food sustainability - Country’s Resilience - Protection against poverty.
The project will be rolled out on a phased approach and is dependent on the commitment and agreement on the rules set out for each of the parties or stakeholders within the public–private partnership (PPP). The phased approach of implemen-tation is set out below:
The steering committee representatives are made up of heads of departments and executives from the industry, which in-clude National Treasury, Department of Fisheries and Forestry, Department of Public Finance, Sasria, Land Bank insurance, Santam, Old Mutual Insure and South Africa Insurance Association.
Market research has been done on some aspects and the World Bank issued a report, which indicated that a PPP is the best option to address the risks relating to drought related risks. A market research is currently underway to look at the specifi c needs and concerns of the farmers relating to insurance.
The operational feasibility assessment is currently underway and in development stage as part of the project phases. Sys-tems and technology relating to data collection and transmission system will be necessary. It is envisaged that between 3-3 staff members will be required to manage the operation.
No legislative and mandate change is currently required.
The costs for the fi rst year is estimated at R20 million, with the project expected to start in the next 12 months.
16.3 Enterprise Architecture project
In line with Sasria’s strategic goals, the Business Operations & IT division will be performing some adjustments to the technology roadmap that is part of building the foundation in order to deliver sustainable Information Technology (IT) services, and to enable and support Sasria. One of the company’s key material matters is technology & data (information) as a cornerstone of the business operations. For this reason, we are continuously improving and enhancing our operational systems to ensure that technology address the business needs and ensure that processes and systems are effi cient. Sasria will stand to benefi t from the impetus of digitalisation by allowing the company to rethink its technology operations from underwriting, customer service to the management of claims.
Digitalisation will allow the company to focus eff orts on product development and distribution management, thus foster-ing change in the foundation of Sasria’s technology, processes, systems and service models.
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The division will ensure the following:• Alignment - Strategic alignment of IT and the business with respect to services and projects.• Value delivery – Ensure that IT delivers on the promised benefi ts against the strategy, optimizing costs and proving
the value of IT.• Resource management – Ensuring proper management of critical IT resources. Ensuring that there is adequate IT
capability and infrastructure to support current and expected future business requirements.• Risk management – Processes must be in place to ensure that risks have been well managed and compliance
requirements understood.• Performance measurement – Verify achievement of strategic IT objectives. Review the measurement of IT perfor-
mance and the contribution of IT to business.
To avoid the technical debt, (the price you pay to catch up in technology) in future, technology needs to be kept up-to-date as the systems could become redundant and the cost of total revamp and catch-up could be staggering and could cause a business failure and ineffi ciencies. The useful life of most of the hardware technologies is three years while software could be maximised to fi ve years. Sasria is currently in the ‘catch-up’ mode from 2018-2020, therefore it is expected that the costs of the technology department will increase over the next three years. Innovative products and technologies will be introduced in the fourth year of the strategy when the basic platforms & architecture will be available to build on. This will include:• Infrastructure upgrades (consolidation), services & management• Business, Technology, applications, Innovation, architecture & system integration• Improving of workspace IT (social, mobile, and connectivity).
A more detailed plan and costs is outlined below:
Infrastructure technology
Objective Financial year Business goal Estimated costs
Review and upgrade cur-rent network infrastructure against business strategy requirements
Internet line upgrade to 150Mbps
Internet line upgrade for cloud deployment & Offi ce 365
Review existing SAN infra-structure at year 4
Increase data storage capacity and ensure suf-fi cient storage capacity for new business strategy
Move to call centre IP PBX Call centre PABX with
voice recording as per new legislation for fi nancial intermediaries
Local cloud hosting, Offi ce 365 and SharePoint Online
FY 2018-2020 Customer centricity and ef-fi ciency
R5-10M
The introduction and deployment of new applications (like IMS and ERP) will be a step-change for Sasria, where the use of technology will be transformational and IT used as a strategic enablement tool. Applications and service excellence are central to Sasria business therefore systems need to be built to support those objectives. Sasria further requires a solution where stakeholder and agent data and information can be stored and could be accessible from a central location. This will allow all employees and management immediate access to real time data.
Technology to consider with new IMS and LSM strategic projects:
Application management
Objective Financial year Business goal Estimated costs
Implement enterprise resource planning (ERP) system phase 1
Human resources (talent, payroll, performance man-agement)
Implement ERP phase 2 Implementation of phase
1 Insurance Management system (IMS)
Implementation of phase 2 & phase 3
Integrated big data & ana-lytics environment
Going full-scale digital CRM deployment (ERP)
FY 2018-2019
FY 2018-2019
FY 2019-2020FY 2018-2019
FY 2019-2022
FY 2020-2022
FY 2020-2025
Customer centricity and ef-fi ciency
R37-R50M
Cyber security in this context refers to policies and practices relating to the protection of information, data, systems and networks from attacks and unauthorised access. Cyber-attacks and intrusions have increased dramatically over the years and have the potential to expose sensitive and personal information, disrupt the operations of the business and lead to reputational or other damages.
In order to reduce the threat of cyber-attacks and intrusions, users must comply with the IT Policy. In order to maintain a se-cure, and resilient network it is important that regular assessments are undertaken to assess Sasria’s vulnerability to ensure appropriate security of information. There is a legislative requirement to protect information hence cyber security support the customer centricity business goal.
Information security & cyber security
Objective Financial year Business goal Estimated costs
Information security framework and cyber secu-rity
Cisco PIX fi rewall upgrade and enhance security authentication
Firewall reporting and early warning detections system
Closing the systems tools gap
IT service management tool (ITSM) Tool, includes service desk
Enterprise program man-agement tool (EPM)
FY 2018 – 2019
FY 2018 – 2019
FY 2018 – 2019
FY 2018 – 2019
FY 2018 – 2019
FY2018-2020
Customer centricity R5-R10M
A mobile strategy should evolve and be aligned with Sasria’s strategy. It should describes how mobile capabilities can assist with achieving Sasria’s strategic goals.
There is an opportunity to innovate with mobile technology. Making use of mobile technologies as an extension to the web
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as a way of doing things that were not possible with any other technology.
A mobile strategy must focus beyond IT (business-to-employee [B2E]) and marketing (business-to-consumer [B2C or B2B]).Careful consideration to governance and risk assessment will be required. A demand and supply assessment will be com-pleted to ensure that there is a genuine strategic advantage in the development or enablement of a mobile application.
Mobile technologies
Objective Financial year Business goal Estimated costs
Mobility suites (excludes build-ing transactional applications)
FY 2018-2020 Customer centricity and ef-fi ciency
R1-2M
The technology will be considered with the design of the new IMS and new strategic projects including LSM.
Emerging technologies
Objective Financial year Business goal Estimated costs
Artifi cial IntelligenceMachine Learning
FY 2020-2021 Customer centricity and effi ciency
R2-3M
Block Chain in insurance FY 2020-2021 Customer centricity and effi ciency
R1M
People are the most important element in driving company strategy and vision. Attracting the right people with the neces-sary skills, at the right time is key to enable and support the business unit to achieve its strategic objectives by aligning itself to the Sasria fi ve year strategic plan and beyond.
People, Process & Service
Objective Financial year Business goal Estimated costs
Implement IT Governance & processes
Improve maturity levels yearly
Human capital development Workforce plan and succes-
sion planning IT Internship, ICT pipeline Implement IT Service Man-
agement (Service Orienta-tion culture)
Customer experience tech-nology
FY 2018-2019
FY 2017-2020
FY 2018-2022FY 2018-2019
FY 2018-2020FY 2019-2020
Customer centricity and effi ciency
R6M
16.4 Incubation programme
An incubation programme is being set up in Sasria which will target small to medium sized black asset management busi-nesses, to enable them to gain a foothold in the South African market and compete with traditional asset managers.
Transformation in the asset management industry remains slow and highly concentrated with the fi ve largest asset manag-ers managing almost 50% of the industries’ assets, whilst black asset management businesses manage a smaller proportion equivalent to less than 9% of the industries’ assets. The asset management industry remains a high barrier to entry due to majority of the assets being managed by larger asset managers with competitive pricing and high start-up costs.
Sasria acknowledges these shortcomings and wishes to make a positive contribution to the development of the South African economy, particularly the asset management industry. Sasria may not contribute to all these shortcomings but will aim to create a valuable contribution within its risk appetite. Sasria recognises that not all managers will be successful and it is therefore important to identify managers that have a high probability of building a successful and sustainable business that is competitive.
The company’s role as a business and corporate citizen is to create opportunities that will empower individuals, their ca-pabilities and result in a meaningful change in our society. This will contribute to the country’s NDP, which aims to create a prosperous future for all South Africans.
The fi rst phase of approving the concept and guidelines has been completed. The tender will be released in February 2018 and fi nal decision on asset manager allocation will be made in May 2018. The transfer of funds will be completed in July 2018.
16.5 IFRS 17 project
In May 2017, the International Accounting Standards Board (IASB) issued the International Financial Reporting Standard (IFRS) 17 standard for insurance contracts, a comprehensive new accounting standard for insurance contracts covering recognition and measurement, presentation and disclosure.
Due to Sasria reporting using IFRS, Sasria has a legal requirement to adhere to the standard. Non-adherence could lead to a qualifi ed audit report and other legal implications.The IFRS 17 model combines a current balance sheet measurement of insurance contract liabilities with the recognition of profi t over the period that services are provided. Insurance contract liabilities are calculated as the present value of future insurance cash fl ows with a provision for risk. Discount rate will refl ect current interest rates. If present value of future cash fl ows would produce a gain at the time a contract is issued, the model would also require a “contractual service margin” to off set the day one gain. The contractual service margin would amortise over the life of the contract.
Certain changes in the estimates of future cash fl ows and the risk adjustments are also recognised over the period that services are provided. Entities will have an option to present the eff ect of changes in discount rates either in profi t and loss or in other comprehensive income.
There will be a new income statement, balance sheet presentation for insurance contracts, including a revised defi nition of revenue, and additional disclosure requirements. The standard includes specifi c guidance on measurement and presenta-tion for insurance contracts with participation features.
IFRS 17 will become eff ective for annual reporting periods beginning on or after 1 January 2021; early application is per-mitted.
The project will be split in the following project phases:
Identify accounting change (November 2017 to March 2018)• Understand the issues/gaps• Engage stakeholders• Train aff ected staff and management• Identify all contracts and source dataDetermine the roadmap (2018)• Determine the transition method• Create roadmap• Identify data gaps• Defi ne key metrics• Validate data quality, accuracy and reliabilityUnderstand the business impact (including IT) (2018)• Assess impact on key metrics• Assess the non-fi nancial eff ect on the organisation and stakeholders• Gain overall understanding of IT environment changesDevelop solutions (2019)• Optimise existing arrangements• Establish new policies• Defi ne business and technical requirements to eff ect the change• Modify existing IT architecture or select software vendor.
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Implement solutions (2020)• Implement solutions and migrate required data• Test the output• Update governance and risk framework• Performance improvement initiatives• Ensure business as usual
17. SWOT ANALYSIS
The SWOT analysis evaluates Sasria’s strengths, weaknesses, opportunities and threats relative to its internal and external contexts (Figure 8).
Figure 8: Sasria’s SWOT analysis for 2018-2019.
18. DIVIDEND POLICY
Sasria advocates the payment of dividends that return excess cash to its shareholder, provided this does not impair the company’s cash resources and capital structure.
For this reason Sasria has adopted a steady, consistent and transparent dividend policy that will not place undue strain on the cash resources and liquidity of the company, or results in inadequate cash reserves to meet future growth require-ments.
The policy caters for an increase in the capital reserves of 10% per annum needed to maintain the levels of the required capital after due consideration of the increase in insured property values.
Sasria’s policy is to declare 30% of after tax profi t as a dividend to the shareholder. As the policy is based on estimated income, the fi nal dividend will be declared by the Board after due consideration of the audited annual fi nancial statements of the company during August of each year.
19. KEY STRATEGIC & FINANCIAL ASSUMPTIONS
Sasria’s key strategic objectives are based on the following scenarios and assumptions: Sasria aims to outperform the 10-year government bond yield in order to deliver value to its shareholder and remain
fi nancially sustainable. South Africa’s real GDP growth will accelerate gradually in the years ahead, weighed down by structural headwinds
from a challenging operating environment and low commodity prices. The current claims trend is forecasted to continue due to South Africa’s current socio-economic and political envi-
ronments. The main drivers of claims are service delivery protests and labour related strikes. Sasria’s reinsurance costs is expected to increase marginally in line with infl ation, as the reinsurance market is experi-
encing soft conditions. Operational and capital expenditure is expected to increase above CPI in order to accommodate critical investment
in strategic projects, systems applications, and new talent acquisition to achieve the company’s strategic projects and deliver on the new strategy.
Staff expansion as required by the changing regulatory environment, identifi ed key-man risks and capacity building to deliver on Sasria’s future strategy;
The FSB TCF regime is based on delivering six outcomes broadly defi ned as Culture; Products; Customer Communi-cations, Marketing and Financial Promotions; Sales and Advice; After-sales Service; and Complaints Handling. The TCF regime has at its heart, the customers’ interests, and Sasria is committed to entrenching the TCF principles as a way of doing its business.
Sasria’s investment philosophy is to safeguard its capital, ensure adequate liquidity to guarantee payment of claims as they fall due and maximise return within this framework. Sasria aims to grow its investments by Consumer Price Index + 2% over a three-year rolling period. Sasria is a signatory to the United Nations’ Principles of Responsible Investment (PRI). Responsible investment is an approach to investment that explicitly acknowledges the relevance to the investor of environmental, social and governance factors, and of the long-term health and stability of the market as a whole. It recognises that the generation of long-term sustainable returns is dependent on stable, well-functioning and well governed social, environmental and economic systems. Sasria is well on its way in aligning its investment process with the PRI principles.
20. KEY PERFORMANCE INDICATORS
The company has developed several key performance indicators (KPI) that will refl ect whether the business plan was successfully implemented (Table 3). In developing the Corporate Plan 2018-2019 and KPI, the following were taken into consideration: Sasria’s mandate – that the company continues to deliver on its mandate. Alignment to Sasria’s fi ve-year strategic plan and long-term objectives. Sasria’s customers – imbedded TCF principles, customers should always be at the forefront of Sasria’s planning and
decision-making. Capital adequacy – the company should always be able to honour its liabilities. Risk management – making ORSA the way business is managed on a day- to- day basis.
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Corporate citizenship – Sasria’s role in supporting the Government’s NDP. Ensuring a balanced scorecard.
Table 3: Key Performance Indicators (KPIs) for the year 2018-2019.
Item # Weight-
ing
Strategic objective KPI Performance targets Budget
1. 10% Sustainable revenue
growth: To consistently outperform the indus-try average in premium growth
GWP income growth9 Achieving GWP income of at least R2 182 320 995 for the year ending 31 March 2019
Budgeted income:GWP: R2 182 320 995
2. 10% Capital management: To target a return on equity greater than the govern-ment bond yield
Maintain sustainable underwriting profi t
Achieving net underwrit-ing profi t10 of between R300 312 066 and R450 468 099 (increase / decrease of 20%) for the year ending 31 March 2019
Budgeted net underwrit-ing profi t
3. 10% Customer centricity: To provide superior customer service
Reduce the internal fast-track11 claims turnaround time12
90%13 of all fast-track claims to be settled within 30 days from the date of submission by 31 March 2019
Included in salary budget
4. 10% Customer centricity: To provide superior customer service
Reduce the internal large loss14 claims turnaround time
70% of large loss claims fi nalised within 60 days by 31 March 2019
Included in salary budget
5. 5% People, capacity and ca-
pability: To attract, retain and develop skills that support our aspirations
Drive employee engage-ment: Individual Percep-tion Monitor (IPM)
Achieve an overall staff IPM survey score of ≥3.8 by 31 March 2019
Included in salary budget
6. 5% Brand development: To create a trusted brand that resonates with all our customers
Maintain Sasria brand awareness in the distribu-tion channels
Maintain a ≥95% brand awareness (independent survey) within the distri-bution channels, by 31 March 2019
Included in the marketing budget
7. 5% Brand development: To create a trusted brand that resonates with all our customers
Achieve Sasria brand awareness with the end-customer
Achieve a ≥40% brand awareness with the end-customer (independent survey), by 31 March 2019
Included in the marketing budget
8. 5% Infrastructure and
cost management: To optimally enable business while satisfying regulatory requirements
Implement the new IT strategy following the EA review
Implementation of the new IT Strategy against the project plan (by 31 March 2019)
Budgeted expenses:R1 000 000
9. 5% Regulatory environ-
ment: To proactively man-age compliance
Improve transformation scores as per Financial Ser-vices Sector (FSC) codes – Employment equity
Achieve ≥13 points (out of 15 maximum) for recruit-ment and retention of black females at middle and junior management levels and attract people with disabilities, by 31 March 2019
Included in salary budget
9 Growth is based on the forecast for the year ending 31 March 2018 at the time of preparing the budget for the year ending 31 March 2019.10 Calculated as follows: GWP less movement in unearned premium reserve, less reinsurance premiums, less claims and loss adjustment expenses, less
expenses for the acquisition of insurance contracts, less managing and other expenses (excluding investment manager fees and corporate social investment), plus commission earned from reinsurers.
11 Claims with an estimate below R250 000. 12 Turnaround time is calculated from the time a claim is recorded on the insurance management system to when a release is issued and repairs are
authorised. Should liability be declined (letter sent to the insured), the date of letter will be utilised for the turnaround time calculation.13 The claims turnaround targets on both the fast-track and large claims were reduced from the targets set in the fi ve-year strategic plan. The rationale
is as follows: a) the current increase in claims frequency is set to continue; and b) claims have become more complex in nature and thus take longer to settle.
14 Claims with an estimate above R250 000.
10. 10% Regulatory environ-
ment: To proactively man-age compliance
Achieve 80% of the set transformation scores as per FSC codes (excluding binder fees and claims procurement15 – Preferen-tial procurement
Achieve an 80% sub-mini-mum of the requirements of the FSC codes preferen-tial procurement target. The Total Measured Pro-curement Spend (TMPS) (excluding binder fees and claims procurement), will be measured as follows (by 31 March 2019):1. Achieve an 64%
procurement spend from all Empowering Suppliers
2. Achieve an 24% pro-curement spend from 51% and above black-owned suppliers
3. Achieve an 14% procurement spend from Qualifying Small Enterprises
4. Achieve an 10% procurement spend from Exempted Micro Enterprises
5. Achieve an 8% procurement spend from 30% and above black women owned suppliers
Included in salary budget
11. 5% Regulatory environ-
ment: To proactively man-age compliance
Achieve maximum transformation scores as per FSC codes (excluding binder fees and claims procurement) – Supplier development
Achieve a 70% (R3.5 million) spend of the allocated Enterprise and Supplier Development16 (ESD) budget funds on supplier development (by 31 March 2019)
Included in salary budget
12. 5% Regulatory environ-
ment: To proactively man-age compliance
Achieve maximum transformation scores as per FCS codes (excluding binder fees and claims procurement) – Enterprise development
Achieve a 30% (R1.5 million) spend of the al-located ESD budget funds on enterprise develop-ment (by 31 March 2019)
Included in salary budget
13. 15% Regulatory environ-
ment: To proactively man-age compliance
Limit irregular, fruitless, wasteful and unauthorised expenditure17
Limit irregular, fruitless, wasteful and unauthorised expenditure to 0% after recoveries18 (by 31 March 2019)
Included in salary budget
15 Claims procurement is currently outsourced to 3rd parties.16 Enterprise Supplier Development allocated budget of R5 million.17 Including any procurement-related and any other form of irregular, fruitless, wasteful and unauthorised expenditure.18 Excluding actual costs of recoveries.
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Table 4: Key Performance Indicators (KPIs) for the year 2019-2020.
Item # Weighting Strategic objective KPI Performance targets Budget
1. 10% Sustainable revenue
growth: To consis-tently outperform the industry average in premium growth
GWP income growth19 Achieving GWP income of at least R2 378 729 885 for the year ending 31 March 2020
Budgeted income:GWP: R2 378 729 885
2. 10% Capital management: To target a return on equity greater than the government bond yield
Maintain sustainable underwriting profi t
Achieving net un-derwriting profi t12 of between R299 134 954 and R448 702 431 (increase / decrease of 20%) for the year end-ing 31 March 2020
Budgeted net under-writing profi t
3. 10% Customer centricity: To provide superior customer service
Reduce the internal fast-track21 claims turn-around time22
90%15 of all fast-track claims to be settled within 25 days from the date of submission by 31 March 2020
Included in salary budget
4. 10% Customer centricity: To provide superior customer service
Reduce the internal large loss24 claims turn-around time
70% of large loss claims fi nalised within 50 days by 31 March 2020
Included in salary budget
5. 5% Brand development: To create a trusted brand that resonates with all our customers
Maintain Sasria brand awareness in the distri-bution channels
Maintain a ≥95% brand awareness (independent survey) within the distribution channels, by 31 March 2020
Included in the market-ing budget
6. 5% Brand development: To create a trusted brand that resonates with all our customers
Achieve Sasria brand awareness with the end-customer
Achieve a ≥50% brand awareness with the end-customer (inde-pendent survey), by 31 March 2020
Included in the market-ing budget
7. 5% Regulatory environ-
ment: To proactively manage compliance
Improve transforma-tion scores as per Fi-nancial Services Sector (FSC) codes – Employ-ment equity
Achieve ≥14 points (out of 15 maximum) for recruitment and retention of black females at middle and junior management levels and attract people with disabili-ties, by 31 March 2020
Included in salary budget
19 Growth is based on the forecast for the year ending 31 March 2019 at the time of preparing the budget for the year ending 31 March 2020.20 Calculated as follows: GWP less movement in unearned premium reserve, less reinsurance premiums, less claims and loss adjustment expenses,
less expenses for the acquisition of insurance contracts, less managing and other expenses (excluding investment manager fees and corporate social investment), plus commission earned from reinsurers.
21 Claims with an estimate below R250 000.22 Turnaround time is calculated from the time a claim is recorded on the Insurance Management System to when a release is issued and repairs are
authorised. Should liability be declined (letter sent to the insured), the date of letter will be utilised for the turnaround time calculation. 23 The claims turnaround targets on both the fast-track and large claims were reduced from the targets set in the fi ve-year Strategic Plan. The ratio-
nale is as follows: a) The current increase in claims frequency is set to continue; and b) Claims have become more complex in nature and thus take longer to settle.
24 Claims with an estimate above R250 000.
8. 10% Regulatory environ-
ment: To proactively manage compliance
Achieve maximum transformation scores as per FSC codes (ex-cluding binder fees and claims procurement25) – Preferential procure-ment
Achieve a maximum score of the require-ments of the FSC codes preferential procure-ment target. The Total Measured Procurement Spend (TMPS) (exclud-ing binder fees and claims procurement), will be measured as follows (by 31 March 2020):1. Achieve an 80%
procurement spend from all Empowering Sup-pliers
2. Achieve an 30% procurement spend from 51% and above black-owned suppliers
3. Achieve an 18% procurement spend from Qualifying Small Enterprises
4. Achieve an 12% procurement spend from Exempted Micro Enterprises
5. Achieve an 10% procurement spend from 30% and above black women owned suppliers
Included in salary budget
9. 5% Regulatory environ-
ment: To proactively manage compliance
Achieve maximum transformation scores as per FSC codes (ex-cluding binder fees and claims procurement) – Supplier development
Achieve 100% scoring of the target set for Enterprise and Supplier Development26 (ESD) programme, in respect of supplier develop-ment (by 31 March 2020)
Included in salary budget
10. 5% Regulatory environ-
ment: To proactively manage compliance
Achieve maximum transformation scores as per FCS codes (ex-cluding binder fees and claims procurement) – Enterprise development
Achieve 100% scoring of the target set for ESD programme, in respect of enterprise development (by 31 March 2020)
Included in salary budget
11. 15% Regulatory environ-
ment: To proactively manage compliance
Limit irregular, fruitless, wasteful and unauthor-ised expenditure19
Limit irregular, fruitless, wasteful and unauthor-ised expenditure to 0% after recoveries28 (by 31 March 2020)
Included in salary budget
12. 5% New KPI to be con-fi rmed
11. 5% New KPI to be con-fi rmed
25 Claims procurement is currently outsourced to 3rd parties.26 Enterprise Supplier Development allocated budget (quantum to be determined).27 Including any procurement-related and any other form of irregular, fruitless, wasteful and unauthorised expenditure.28 Excluding actual costs of recoveries.
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Table 5: Key Performance Indicators (KPIs) for the year 2020-2021.
Item # Weighting Strategic objective KPI Performance targets Budget
1. 10% Sustainable revenue
growth: To consis-tently outperform the industry average in premium growth
GWP income growth29 Achieving GWP income of at least R2 592 815 575 for the year ending 31 March 2019
Budgeted income:GWP: R2 592 815 575
2. 10% Capital management: To target a return on equity greater than the government bond yield
Maintain sustainable underwriting profi t
Achieving net un-derwriting profi t30 of between R339 475 659 and R509 213 488 (increase / decrease of 20%) for the year end-ing 31 March 2021
Budgeted net under-writing profi t
3. 10% Customer centricity: To provide superior customer service
Reduce the internal fast-track31 claims turn-around time32
90%25 of all fast-track claims to be settled within 20 days from the date of submis-sion by 31 March 2021
Included in salary budget
4. 10% Customer centricity: To provide superior customer service
Reduce the internal large loss34 claims turn-around time
70% of large loss claims fi nalised within 45 days by 31 March 2021
Included in salary budget
5. 5% People, capacity and
capability: To attract, retain and develop skills that support our aspirations
Drive employee en-gagement: Individual Perception Monitor (IPM)
Achieve an overall staff IPM survey score of ≥3.9 by 31 March 2021
Included in salary budget
6. 5% Brand development: To create a trusted brand that resonates with all our customers
Maintain Sasria brand awareness in the distri-bution channels
Maintain a ≥95% brand awareness (independent survey) within the distribution channels, by 31 March 2021
Included in the market-ing budget
7. 5% Brand development: To create a trusted brand that resonates with all our customers
Achieve Sasria brand awareness with the end-customer
Achieve a ≥60% brand awareness with the end-customer (inde-pendent survey), by 31 March 2021
Included in the market-ing budget
29 Growth is based on the forecast for the year ending 31 March 2020 at the time of preparing the budget for the year ending 31 March 2021.30 Calculated as follows: GWP less movement in unearned premium reserve, less reinsurance premiums, less claims and loss adjustment expenses, less
expenses for the acquisition of insurance contracts, less managing and other expenses (excluding investment manager fees and corporate social investment), plus commission earned from reinsurers.
31 Claims with an estimate below R250 000.32 Turnaround time is calculated from the time a claim is recorded on the Insurance Management System to when a release is issued and repairs are
authorised. Should liability be declined (letter sent to the insured), the date of letter will be utilised for the turnaround time calculation.33 The claims turnaround targets on both the fast-track and large claims were reduced from the targets set in the fi ve-year Strategic Plan. The rationale
is as follows: a) The current increase in claims frequency is set to continue; and b) Claims have become more complex in nature and thus take longer to settle.
34 Claims with an estimate above R250 000.
8. 5% Regulatory environ-
ment: To proactively manage compliance
Improve transforma-tion scores as per Fi-nancial Services Sector (FSC) codes – Employ-ment equity
Maintain ≥14 points (out of 15 maximum) for recruitment and retention of black females at middle and junior management levels and attract people with disabili-ties, by 31 March 2021
Included in salary budget
9. 10% Regulatory environ-
ment: To proactively manage compliance
Achieve maximum transformation scores as per FSC codes (ex-cluding binder fees and claims procurement27) – Preferential procure-ment
Achieve maximum score of the require-ments of the FSC codes preferential procurement target. The Total Measured Procurement Spend (TMPS) (excluding binder fees and claims procurement), will be measured as follows (by 31 March 2021):1. Achieve an 80%
procurement spend from all Empowering Suppliers
2. Achieve a 30% procurement spend from 51% and above black-owned suppliers
3. Achieve an 18% procurement spend from Qualifying Small Enterprises
4. Achieve a 12% procurement spend from Exempted Micro Enterprises
5. Achieve an 10% procurement spend from 30% and above black women owned suppliers
Included in salary budget
35 Claims procurement is currently outsourced to 3rd parties.
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10. 5% Regulatory environ-
ment: To proactively manage compliance
Achieve maximum transformation scores as per FSC codes (ex-cluding binder fees and claims procurement) – Supply development
Achieve 100% scoring of the target set for Enterprise and Sup-plier Development28 (ESD) programme in respect of supplier development (by 31 March 2021)
Included in salary budget
11. 5% Regulatory environ-
ment: To proactively manage compliance
Achieve maximum transformation scores as per FCS codes (ex-cluding binder fees and claims procurement) – Enterprise develop-ment
Achieve 100% scoring of the target set for the ESD programme, in respect of enter-prise development (by 31 March 2021)
Included in salary budget
12. 15% Regulatory environ-
ment: To proactively manage compliance
Limit irregular, fruitless, wasteful and unauthor-ised expenditure29
Limit irregular, fruitless, wasteful and unauthorised expenditure to 0% after recoveries30 (by 31 March 2021)
Included in salary budget
13. 5% New KPI to be con-fi rmed
36 Enterprise Supplier Development allocated budget (quantum to be determined).
21. ALIGNMENT OF STRATEGIC OBJECTIVES TO THE NATIONAL DEVELOPMENT PLAN
Sasria’s objective is to deliver on its mandate which is to protect the assets of all in South Africa against special risk. This is done through provision of guaranteed special risk insurance cover at reasonable cost- irrespective of the political risk in South Africa. Insurance is the backbone for every industrial economy and without the guarantees of assets protection for investors, the country will have diffi culty attracting and retaining foreign investors. Table 6 indicates the alignment between Sasria’s strategic objectives and Government’s NDP priorities, and outlines the specifi c contribution that Sasria makes to Government’s NDP priorities in general.
Table 6: Sasria’s strategic objective alignment to the NDP.
NDP outcomes Sasria’s contribution
• Decent employment through inclusive economic growth
• Quality basic education
• A long and healthy life for all South Africans
• All people in South Africa are and feel safe
• Sustainable human settlements and improved quality of
household life
Ensuring jobs are not lost, by:
• Reimbursing businesses for the loss of income due to business interruptions or damage to assets caused by events related to special risk events
• Restoring their liquidity or business operations quickly and effi ciently
Contributing to economic empowerment and transformation,
by:
• Investing with B-BBEE asset managers
• Increasing procurement spend with black-owned businesses as per the FSC
• Applying these principles in the company’s procurement poli-cies and practices
• Applying these principles in the company’s employment poli-cies and practices
• A skilled and capable workforce to support an inclusive
growth path
Developing skills in the fi nancial sector to ensure sustainabil-
ity and transformation, by:
• Investing 5% of after-tax profi t in CSI initiatives, with 84% of these funds allocated to education and development. This includes a particular focus on specialist skills-sets required in the fi nancial and insurance sectors
• Investing in the fi nancial services sector (developing actuaries) through the support of the SAADP
• Training and developing Sasria’s employees via its talent man-agement strategy
• Taking in graduates and interns, and developing their skills
• An effi cient, competitive and responsive economic infra-
structure network
• Protecting and enhancing our environmental assets and
natural resources
Investing profi ts responsibly, developing infrastructure, by:
• Encouraging and protecting infrastructure development by providing special construction risk insurance
• Investing company profi ts responsibly to ensure that Sasria remains fi nancially sustainable and is able to respond when South Africa needs it to pay the claims
• Investing in infrastructure development through asset manag-ers
• Investing a portion of company profi ts in projects targeted at expanding the infrastructure of schools in underprivileged, underdeveloped and rural communities
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• Create a better South Africa, contribute to a better and
safer Africa in a better world
Instilling investor confi dence, by:
• Demonstrating Sasria’s reliability and fi nancial strength to act as a guarantee that all claims will be paid to help encourage businesses both locally and internationally to invest in South Africa
• Instilling an ethical culture in Sasria by fi ghting corruption through ethics and fraud prevention awareness campaigns
• An effi cient, eff ective and development-oriented public
service
• A responsive, accountable, eff ective and effi cient develop-
mental local government system
Contributing to the fi scus of South Africa, by:
• Creating income (dividends) for the shareholder through contributing to government’s revenue for spending in any of its NDP priorities
• Being fi nancially responsible and disciplined as a state-owned company
• Delivering Sasria’s legislative mandate in a highly eff ective and profi table manner
• Researching and investigating coverage for any special perils that could be considered to be of national interest
• Creating jobs for staff and for the insurance industry by provid-ing learnership programmes
• Instilling a strong governance culture in Sasria
• An inclusive and responsive social protection system
• A diverse, socially cohesive society with a common national
identity
• Vibrant, equitable and sustainable rural communities con-
tributing to food security for all
Aff ordable short-term insurance for the huge uninsured
market, by:
• Contributing to the growth and transformation of the insur-ance market and fi nancial sector
• Doing research and making aff ordable short-term insurance protection increasingly available and accessible to the huge uninsured market
• Providing basic fi nancial literacy and consumer education on the benefi ts of fi nancial inclusion and insurance
22. BORROWING PLAN
No Borrowing Plan is included in this document, as Sasria does not have any current or intended plans for foreign or domestic borrowing. The company is self-funded and suffi ciently capitalised.
23. SUPPORTING DOCUMENTS
The supporting framework for this Corporate Plan consists of the following:• Signifi cance & Materiality Framework (Annexure 1);• Financial Plan (Annexure 2);• Corporate Risk Register – Top 10 risks (Annexure 3); and• Fraud Prevention Plan (Annexure 4).
24. APPROVAL
SIGNED at _____________________ on this the ___________ day of ____________ 2018.
AS WITNESS:
__________________________ ______________________________C. M. MASONDO M. A. SAMIE
Managing Director Chairperson of the Board of DirectorsSasria SOC Ltd Sasria SOC Ltd
SIGNED at _____________________ on this the ___________ day of ____________ 2018.
AS WITNESS:
______________________________ ______________________________ N. NENE
Shareholder representative for and on behalf of the Government of the Republic of South Africa. MINISTER OF FINANCE
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ANNEXURE 1: SIGNIFICANCE & MATERIALITY FRAMEWORK
SIGNIFICANCE FRAMEWORK
National Treasury will be informed in writing and the relevant particulars of the transaction will be submitted for approval if the transaction entails any of the following, irrespective of the rand amount involved:
Establishment or participation in the establishment of a company:
• Participation is not specifi ed in the 2018-2019 Corporate Plan.
Participation in a signifi cant partnership, trust, unincorporated joint-venture or similar arrangement:
• Participation is not specifi ed in the 2018-2019 Corporate Plan.
Acquisition or disposal or a signifi cant shareholding in a company:
• Acquisition or disposal is not specifi ed in the 2018-2019 Corporate Plan.• Acquisition or disposal is signifi cant if:
a) It aff ects ownership controlb) Sasria’s right to pass or block a special resolution is aff ectedc) There is a change of at least 20% in shareholdingd) For an acquisition, any transaction resulting in shareholding of at least 20% in a company.
Acquisition or disposal of a signifi cant asset:
• Acquisition or disposal is not specifi ed in the 2018-2019 Corporate Plan and participation is for more than or equal to 2% of gross written premium.
Commencement or cessation of a signifi cant business activity:
• If such activity is not specifi ed in the 2018-2019 Corporate Plan.
A signifi cant change in the nature or extent of its interest in a signifi cant partnership, trust, unincorporated joint-
venture or similar arrangement:
• Of 20% of total issued shares or more if not specifi ed in the 2018-2019 Corporate Plan.• Ownership control is aff ected, if not specifi ed in the 2018-2019 Corporate Plan.• The ability to pass or block a special resolution is aff ected, if not specifi ed in the 2018-2019 Corporate Plan.
MATERIALITY FRAMEWORK
National Treasury will be informed in writing and the relevant particulars of the expenditure/recovery/loss will be submit-ted if any of the following conditions are triggered:
Irregular expenditure:
• Any irregular expenditure incurred.
Fruitless or wasteful expenditure:
• Any fruitless and wasteful expenditure incurred.
Material losses through criminal conducts:
• Any individual item that is more than or equal to 2% of gross written premium.• Any class of closely related items that collectively are more than or equal to 2% of gross written premium.
Losses recovered or written off :
• Any individual item that is more than or equal to 2% of gross written premium.• Any class of closely related items that collectively are more than or equal to 2% of gross written premium.
ANNEXURE 2: FINANCIAL PLAN
The fi nancial plan is based on the 2018-2019 forecast and has taken into account the strategic objectives Sasria envisages to meet for the year ending 31 March 2019. The budget is approved by the Board of Directors.
STATEMENT OF FINANCIAL PERFORMANCE
Budget Forecast Budget Budget Budget 2018 2018 2019 2020 2021R'000 R'000 R'000 R'000 R'000
Gross written insurance premium 2 002 614 0.9% 2 020 819 8.0% 2 182 321 9.0% 2 378 730 9.0% 2 592 816Insurance premium ceded to reinsurers (159 952) 0.8% (161 211) 15.6% (186 360) 8.8% (202 772) 8.8% (220 662)Net written insurance premium 1 842 662 0.9% 1 859 608 7.3% 1 995 961 9.0% 2 175 958 9.0% 2 372 154Unearned premium reserve movement (22 100) (9.0%) (20 107) 74.6% (35 097) 20.9% (42 449) 9.0% (46 270)Net insurance premium earned 1 820 562 1.0% 1 839 501 6.6% 1 960 864 8.8% 2 133 509 9.0% 2 325 884Gross claims incurred (773 351) 5.1% (813 047) 8.4% (881 608) 8.8% (959 272) 9.0% (1 045 689)Claims and loss adjustment expenses recovered from reinsurers (7) 100.0% (137) (99.5%) (1) 100.0% (0) - (0)
Expenses for the acquisition of insurance contracts (275 944) 2.1% (281 654) 13.7% (320 235) 12.4% (359 951) 6.4% (383 013)Commission earned from reinsurers 18 218 12.9% 20 574 29.8% 26 708 (4.6%) 25 488 9.0% 27 782Binder fees expense (247 540) 0.6% (249 109) 4.0% (259 114) 8.0% (279 904) 9.0% (305 095)Expenses for administration and marketing (128 656) (0.2%) (128 447) 17.7% (151 223) 23.0% (185 952) 5.1% (195 525)Net underwriting results 413 282 (6.2%) 387 681 (3.2%) 375 390 (0.4%) 373 919 13.5% 424 345Strategic expenses (9 737)Investment income 499 640 (1.2%) 493 808 18.1% 583 316 7.1% 624 814 7.5% 671 540Investment management expenses (29 172) (42.3%) (16 840) (2.3%) (16 445) (12.2%) (14 443) 7.2% (15 488)Corporate social investment expense (25 452) (54.2%) (11 650) 131.7% (26 998) 5.5% (28 493) 9.7% (31 271)Other income - 100.0% 63 100.0% 0 - 0 - 0Net profit before tax 858 298 (0.6%) 853 061 6.2% 905 526 5.6% 955 797 9.8% 1 049 126Income tax expense (237 499) 0.7% (239 231) 3.4% (247 371) 7.5% (265 981) 11.7% (297 157)Net profit after tax 620 798 (1.1%) 613 830 7.2% 658 155 4.8% 689 816 9.0% 751 969
Var%
Var%
Var% Year ending 31 March Var
%
The bonus pool for the year ending 31 March 2019 is capped at a maximum of 2.5% (R15 209 032) of the budgeted net profi t after tax for the year (Forecast 2018: 1.24%, actual 2017: 1.78%, actual 2016: 2.70%).
The bonus pool for the year ending 31 March 2019 is capped at 20% of the total staff expenditure, including bonuses (Fore-cast 2018: 12%, actual 2017: 15.82%, actual 2016: 23.58%).
The bonus pool will only be paid once three gatekeepers have been met as per the Sasria Total Rewards Policy.The gatekeepers are:- Achievement of an unqualifi ed audit report;- Achievement of 60% of the Company’s KPIs as per the corporate plan; and- Achievement of 70% of the forecast underwriting profi t.
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STATEMENT OF FINANCIAL POSITION
Budget Forecast Budget Budget Budget2018 2018 2019 2020 2021R'000 R'000 R'000 R'000 R'000
AssetsProperty, plant and equipment 8 813 4 119 10 247 7 114 4 865Intangible assets 65 148 62 377 124 421 137 535 125 753Financial assets‑ at fair value through profit and loss 5 552 755 5 695 797 5 787 619 6 262 177 6 770 556‑ loans and receivables 112 146 180 457 185 103 192 867 201 016Insurance receivables 143 244 179 839 190 614 207 776 226 482Reinsurance contracts 10 384 12 823 13 852 15 019 16 290Current tax receivable - - - - -Cash and cash equivalents 1 418 124 1 282 538 1 771 135 1 664 635 1 800 311Total Assets 7 310 614 7 417 950 8 082 991 8 487 123 9 145 273
EquityShare capital - - - - -Non distributable regulatory reserves 556 727 495 513 495 513 495 513 495 513Retained earnings 5 616 072 5 735 202 6 209 208 6 701 578 7 246 602Total Equity 6 172 799 6 230 715 6 704 721 7 197 091 7 742 115
LiabilitiesDeferred income 3 115 3 847 4 156 4 506 4 887Deferred tax 25 055 20 985 14 809 13 167 16 569Employee benefit liability 1 872 3 433 1 917 1 401 855Insurance contracts 889 724 958 539 1 035 904 1 123 647 1 224 777Payables 218 049 200 431 321 484 147 311 156 070Total Liabilities 1 137 815 1 187 235 1 378 270 1 290 032 1 403 158
Total Equity and Liabilities 7 310 614 7 417 950 8 082 991 8 487 123 9 145 273
Year ended 31 March
STATEMENT OF CASH FLOWS
Budget Forecast Budget Budget BudgetYear ended 31 March 2018 2018 2019 2020 2021
R'000 R'000 R'000 R'000 R'000
Cash flows from operating activitiesCash generated from operations 390 455 (76 736) 260 953 1 875 215 776 Investment income 499 640 272 735 289 561 311 256 334 167 Income tax paid (238 836) (267 408) (221 739) (136 535) (136 535)Net cash inflow from operating activities 651 259 (71 409) 328 775 176 596 413 408
Cash flows from investing activitiesPurchase of property, plant and equipment (3 063) (839) (8 912) (250) (2 750)Purchase relating to intangible assets (8 080) - (53 926) (29 350) (5 000)Purchase of investments (338 779) (1 272 644) 433 038 (64 705) (66 196)Net cash outflow from investing activities (349 922) (1 273 483) 370 200 (94 305) (73 946)
Cash flows from financing activitiesDividends paid (166 934) (162 904) (210 378) (188 791) (203 786)Net cash outflow from financing activities (166 934) (162 904) (210 378) (188 791) (203 786)
Net (decrease)/ increase in cash and cash equivalents 134 403 -1 507 796 488 597 -106 500 135 676 Cash and cash equivalents at the beginning of year 1 283 721 2 790 334 1 282 538 1 771 135 1 664 635 Cash and cash equivalents at the end of year 1 418 124 1 282 538 1 771 135 1 664 635 1 800 311
CAPITAL EXPENDITURE
Year ended 31 MarchBudget 2018 R'000
Forecast 2018 R'000
Budget 2019 R'000
Budget 2020 R'000
Budget 2021 R'000
Computer equipment 1 923 1 923 3 598 - -Computer so ware 8 080 13 080 53 926 34 120 5 000Leasehold improvements 480 480 5 064 - -Furniture and fi ngs 660 660 1 530 250 -Total 11 143 16 143 64 118 34 370 5 000
Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019 | 5352 | Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019
#R
isk
Na
me
Ris
k C
lass
ifi c
ati
on
Inh
ere
nt
Ris
kR
esi
du
al
Ris
kO
ve
rall
C
on
tro
l E
ff e
ctiv
en
ess
Re
spo
nsi
ble
E
xe
cu
tiv
e
Ma
na
ge
r
Co
ntr
ol
Ke
y a
cti
on
s w
he
re c
on
tro
ls a
re
no
t e
ff e
cti
ve
1In
crea
sed
insu
ranc
e ris
k as
a
resu
lt of
pro
long
ed s
trik
es
and
prot
est
Und
erw
ritin
g Ri
skVe
ry H
igh
Hig
hFa
irEx
ecut
ive
Man
-ag
er: I
nsur
ance
O
pera
tions
Calc
ulat
ing
Sasr
ia c
apita
l re
quire
men
ts o
n a
quar
-te
rly b
asis
and
pro
vidi
ng
feed
back
to th
e Ch
ief R
isk
Offi
cer w
heth
er c
apita
l re
quire
men
ts a
re w
ithin
risk
ap
petit
e.U
ltim
ate
loss
ratio
s ar
e tr
acke
d on
a q
uart
erly
bas
is
and
pres
ente
d to
the
Risk
Co
mm
ittee
.Pr
icin
g re
view
con
duct
ed
annu
ally
. Cha
nge
in ri
sk
profi
le c
onsi
dere
d w
hen
tech
nica
l pric
ing
is s
et.
The
clai
ms
incu
rred
ex
pens
e an
d ou
tsta
nd-
ing
clai
ms
bala
nce
as p
er
IMS;
and
Gre
at P
lain
s ar
e re
conc
iled
mon
thly
to
iden
tify
erro
rs a
nd s
igne
d off
mon
thly
and
qua
rter
ly
by th
e SR
M a
nd F
inan
ce
Dire
ctor
resp
ectiv
ely
The
loss
ratio
is in
spec
ted
mon
thly
by
Fina
nce
and
fi ndi
ngs
are
disc
usse
d w
ith
the
Exec
utiv
e M
anag
er:
Insu
ranc
e O
pera
tions
.Re
serv
ing
calc
ulat
ions
are
pe
rfor
med
qua
rter
ly a
nd
revi
ewed
.Re
serv
ing
calc
ulat
ions
are
pe
rfor
med
ann
ually
and
re
view
ed.
Perf
orm
an
annu
al P
ossi
ble
Max
imum
Los
s (P
ML)
stu
dy
on s
elec
ted
know
n in
sure
d pr
oper
ties
(cap
ping
on
ex-
posu
re) t
o en
sure
suffi
cie
nt
rein
sura
nce
is p
urch
ased
. In
addi
tion,
sce
nario
ana
lysi
s is
per
form
ed.
Eff e
ctiv
enes
s an
d effi
cie
ncy
of re
insu
ranc
e ar
e as
sess
ed
on a
n an
nual
bas
is.
Revi
ew n
ewsp
aper
s an
d m
edia
for p
ossi
ble
clai
ms.
Iden
tify
poss
ible
Sas
ria
clai
ms/
even
ts.
Opi
nion
s ar
e gi
ven
for a
ll cl
aim
litig
atio
ns. T
he li
tiga-
tion
mat
ters
are
mon
itore
d.
All
reje
cted
cla
ims
are
logg
ed a
nd s
igne
d off
. Le
t-te
rs a
re is
sued
.Th
e cl
aim
s re
ject
ion
lett
ers
are
mon
itore
d. T
he le
tter
s co
ntai
n de
tails
of w
here
co
mpl
aint
s ca
n be
logg
ed.
Dra
ftin
g of
con
trac
ts to
en
sure
that
they
are
lega
lly
bind
ing
and
cont
ain
all t
he
corr
ect w
ordi
ng.
#R
isk
Na
me
Ris
k C
lass
ifi c
ati
on
Inh
ere
nt
Ris
kR
esi
du
al
Ris
kO
ve
rall
C
on
tro
l E
ff e
ctiv
en
ess
Re
spo
nsi
ble
E
xe
cu
tiv
e
Ma
na
ge
r
Co
ntr
ol
Ke
y a
cti
on
s w
he
re c
on
tro
ls a
re
no
t e
ff e
cti
ve
2In
com
plet
e an
d In
accu
rate
Sa
sria
reve
nue
Und
erw
ritin
g/O
p-er
atio
nal R
isk
Hig
hM
ediu
mFa
irEx
ecut
ive
Man
-ag
er: I
nsur
ance
O
pera
tions
All
sale
s and
pro
duct
aw
are-
ness
pre
sent
atio
ns a
re
revi
ewed
by
the
Exec
utiv
e M
anag
er: I
nsur
ance
Ope
ra-
tions
. The
top
10 a
gent
s are
pr
iorit
ised
for t
he sa
les a
nd
prod
uct a
war
enes
s pre
sen-
tatio
ns a
s the
y co
ntrib
ute
tow
ards
70%
of S
asria
’s in
com
e.
The
seni
or b
ookk
eepe
r re
conc
iles t
he A
nnex
ure
1 re
turn
s rec
eive
d fro
m th
e ag
ents
with
the
prem
ium
s in
the
bank
acc
ount
s bef
ore
the
prem
ium
info
rmat
ion
is c
aptu
red
on IM
S. T
he
CRM
s are
info
rmed
of a
ny
conc
erni
ng a
mou
nts.
AN
NE
XU
RE
3: T
OP
10
RIS
K R
EG
IST
ER
Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019 | 5554 | Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019
#R
isk
Na
me
Ris
k C
lass
ifi c
ati
on
Inh
ere
nt
Ris
kR
esi
du
al
Ris
kO
ve
rall
C
on
tro
l E
ff e
ctiv
en
ess
Re
spo
nsi
ble
E
xe
cu
tiv
e
Ma
na
ge
r
Co
ntr
ol
Ke
y a
cti
on
s w
he
re c
on
-tr
ols
are
no
t e
ff e
cti
ve
Wee
kly
bank
acc
ount
reco
ncili
a-tio
ns a
re p
erfo
rmed
by
the
book
-ke
eper
and
revi
ewed
by
the
fi nan
-ci
al m
anag
er to
ens
ure
that
ther
e ar
e no
una
lloca
ted
prem
ium
s.Th
e Fi
nanc
e de
part
men
t kee
ps
trac
k of
the
prem
ium
s rec
eive
d m
onth
ly a
nd p
enal
ties a
re is
sued
to
age
nts t
hat d
o no
t pay
pre
mi-
ums.
Prem
ium
ana
lysi
s is c
ondu
cted
m
onth
ly to
mon
itor p
rem
ium
m
ovem
ents
and
fi nd
ings
are
re
port
ed. R
elev
ant a
gent
s are
en
gage
d on
the
fi ndi
ngs.
All
larg
e fl u
ctua
tions
in p
rem
ium
s are
in-
vest
igat
ed a
nd re
port
ed m
onth
ly
to th
e Ex
ecut
ive
Man
ager
: Ins
ur-
ance
Ope
ratio
ns.
The
Cogn
os sy
stem
is
bein
g im
prov
ed to
cat
er
for r
epor
ts th
at c
an b
e us
ed b
y th
e St
akeh
olde
r M
anag
emen
t Div
isio
n to
pe
rfor
m th
eir p
rem
ium
an
alyt
ics.
Ana
lysi
s of a
ll pr
emiu
m re
ver-
sals
pro
cess
ed b
y th
e ag
ents
is
perf
orm
ed b
y th
e CR
Ms m
onth
ly.
All
reve
rsal
s are
que
ried
by th
e CR
Ms a
nd th
e ex
plan
atio
ns a
re
docu
men
ted
on a
n ex
cel s
prea
d-sh
eet.
The
fi ndi
ngs a
re re
port
ed to
th
e Ex
ecut
ive
Man
ager
: Ins
uran
ce
Ope
ratio
ns m
onth
ly a
nd to
the
Exec
utiv
e Co
mm
ittee
qua
rter
ly.
The
prem
ium
reve
rsal
an
alyt
ics c
an b
e im
prov
ed
by e
nsur
ing
that
det
aile
d ev
iden
ce is
obt
aine
d fo
r all
reve
rsal
s.
The
prem
ium
reve
rsal
an
alyt
ics n
eed
to b
e co
m-
mun
icat
ed to
the
Fina
nce
Dire
ctor
mon
thly
.Re
fund
s are
app
rove
d in
line
w
ith th
e pr
emiu
m m
anag
emen
t pr
oces
s. A
ll re
fund
s und
er R
200
000
are
auth
oris
ed b
y th
e CR
Ms.
All
refu
nds o
ver R
200
000
are
auth
oris
ed b
y th
e Ex
ecut
ive
Insu
r-an
ce O
pera
tions
. Sig
n- o
ff of
re-
fund
s is d
one
by b
oth
the
FD a
nd
Exec
utiv
e In
sura
nce
Ope
ratio
ns.
Ther
eaft
er F
inan
ce p
roce
sses
the
tran
sact
ion.
Fina
nce
Dire
ctor
follo
ws u
p on
qu
alifi
ed a
udit
repo
rts.
The
Exec
u-tiv
e M
anag
er: I
nsur
ance
Ope
ra-
tions
follo
ws u
p on
qua
lifi e
d au
dit
repo
rts t
hat h
ave
a si
gnifi
cant
op
erat
iona
l im
pact
.
The
proc
ess f
or fo
llow
-in
g up
on
qual
ifi ed
aud
it re
port
s will
be
clea
rly
docu
men
ted
to e
nsur
e cl
ear s
egre
gatio
n of
dut
ies.
3Fa
ilure
of b
usin
ess
to
resp
ond
to In
form
atio
n Te
chno
logy
dev
elop
men
tsSt
rate
gic
Risk
Hig
hM
ediu
mFa
ir
Exec
utiv
e M
anag
-er
: Bus
ines
s O
pera
-tio
ns a
nd In
form
a-tio
n Te
chno
logy
Ther
e ar
e st
rate
gy s
essi
ons
held
an
nual
ly w
ith a
ll th
e m
anag
ers
and
exec
utiv
e m
anag
ers.
The
stra
-te
gic
obje
ctiv
es o
f the
follo
win
g ye
ar a
re d
iscu
ssed
and
agr
eed
on.
Each
dep
artm
ent t
hen
fi nal
ises
th
eir b
udge
t for
the
follo
win
g ye
ar
afte
r it i
s re
view
ed b
y th
e Fi
nanc
e D
irect
or. I
T m
eets
with
bus
ines
s to
de
term
ine
thei
r IT
requ
irem
ents
fo
r the
follo
win
g ye
ar in
ord
er to
bu
dget
acc
ordi
ngly
.
Com
plet
ion
of a
com
-pr
ehen
sive
Ent
erpr
ise
Arc
hite
ctur
e Re
view
(In
prog
ress
).
Fund
s w
ere
budg
eted
in
the
2017
bud
get t
o en
-ha
nce
soft
war
e sy
stem
s to
in
crea
se e
ff ect
iven
ess
and
effi c
ienc
y.
#R
isk
Na
me
Ris
k C
lass
ifi c
ati
on
Inh
ere
nt
Ris
kR
esi
du
al
Ris
kO
ve
rall
C
on
tro
l E
ff e
ctiv
en
ess
Re
spo
nsi
ble
E
xe
cu
tiv
e
Ma
na
ge
r
Co
ntr
ol
Ke
y a
cti
on
s w
he
re c
on
-tr
ols
are
no
t e
ff e
cti
ve
4
Lack
of p
olic
y ho
lder
dat
aO
pera
tiona
l Ris
kH
igh
Hig
hPo
orCh
ief R
isk
Offi
cer
Ann
ually
per
form
a P
ossi
ble
Max
imum
Los
s st
udy
on s
elec
ted
know
n in
sure
d pr
oper
ties
(cap
-pi
ng o
n ex
posu
re) t
o en
sure
e s
uf-
fi cie
nt re
insu
ranc
e is
pur
chas
ed.
In a
dditi
on, s
cena
rio a
naly
sis
is
perf
orm
ed.
Dat
a re
conc
iled
with
Ann
exur
e 1’
s fo
r eac
h ag
ent.
A le
tter
to re
ques
t inf
orm
atio
n w
as s
end
out t
o al
l age
nts.
We
are
curr
ently
in th
e pr
oces
s of
ens
ur-
ing
that
the
qual
ity a
nd q
uant
ity
of th
e da
ta is
app
ropr
iate
for t
he
agen
ts th
at s
ubm
itted
dat
a. In
ad-
ditio
n th
e pr
ogre
ss is
trac
ked
on a
m
onth
ly b
asis
thro
ugh
the
set k
ey
risk
indi
cato
rs.
Com
mun
icat
ion
has
been
se
nt o
ut to
the
indu
stry
by
the
Stak
ehol
der M
anag
e-m
ent D
ivis
ion
requ
estin
g ris
k da
ta. S
ome
agen
ts
have
resp
onde
d an
d th
ere
is a
nee
d to
ens
ure
that
FT
P fi l
es a
re c
reat
ed fo
r all
agen
ts in
ord
er to
ens
ure
that
dat
a is
sec
urel
y tr
ans-
ferr
ed.
Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019 | 5756 | Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019
Hig
hH
igh
Poor
Actio
n:1.
Impl
emen
tatio
n of
the
plan
to o
btai
n da
ta fr
om
all a
gent
s.2.
Eng
agem
ent w
ith a
gent
s th
at h
ave
not y
et su
bmit-
ted
data
.3.
Est
ablis
hmen
t of a
syst
em
to e
nsur
e th
at d
ata
fi eld
s co
uld
be u
sed
to a
sses
s da
ta.
4. E
valu
atio
n of
dat
a qu
ality
by
per
form
ing
a re
con-
cilia
tion
betw
een
the
rece
ived
dat
a se
t and
the
paym
ents
rece
ived
from
th
e ag
ent.
A n
ew sy
stem
nee
ds to
be
put i
n pl
ace
to w
areh
ouse
all
the
data
re
ceiv
ed fr
om th
e ag
ents
.
Base
d on
our
initi
al re
ques
t se
nt to
the
indu
stry
, in
orde
r to
obt
ain
polic
yhol
der d
ata,
w
e’ve
rece
ived
lim
ited
data
from
ag
ents
on
a m
onth
ly b
asis.
With
th
e re
sign
atio
n of
the
prev
ious
Ex
ecut
ive
Man
ager
: Ins
uran
ce
Ope
ratio
ns, t
he re
spon
sibi
l-ity
of o
btai
ning
dat
a be
cam
e th
e re
spon
sibi
lity
of th
e ris
k m
anag
emen
t fun
ctio
n. T
he ri
sk
man
agem
ent f
unct
ion
has fi
nal
-is
ed a
new
pla
n th
at w
ill fo
cus
on o
btai
ning
qua
lity,
com
plet
e an
d ac
cura
te d
ata
over
the
next
th
ree
year
s fro
m a
gent
s. Th
e fo
cus w
ill b
e to
obt
ain
data
from
th
e to
p 10
age
nts a
nd a
gent
s w
ith e
ngin
eerin
g co
ntra
cts
with
in th
e ne
xt y
ear.
We
are
in
the
proc
ess o
f rec
onci
ling
data
re
ceiv
ed fr
om a
gent
s and
hav
e st
arte
d in
putt
ing
data
ont
o th
e da
ta w
areh
ouse
.
To a
ddre
ss th
e re
spon
se ra
te a
nd
data
qua
lity
conc
erns
furt
her
actio
ns is
requ
ired.
- M
eetin
gs w
ill b
e he
ld w
ith
the
top
20 a
gent
s, to
dis
cuss
qu
ality
and
qua
ntity
of t
he p
ro-
vide
d da
ta a
nd re
ason
s for
not
pr
ovid
ing
the
nece
ssar
y da
ta.
#R
isk
Na
me
Ris
k C
lass
ifi c
ati
on
Inh
ere
nt
Ris
kR
esi
du
al
Ris
kO
ve
rall
C
on
tro
l E
ff e
ctiv
en
ess
Re
spo
nsi
ble
E
xe
cu
tiv
e
Ma
na
ge
r
Co
ntr
ol
Ke
y a
cti
on
s w
he
re c
on
-tr
ols
are
no
t e
ff e
cti
ve
5In
abili
ty to
att
ract
and
reta
in
spec
ialis
ed sk
ills i
n th
e co
mpa
ny
Ope
ratio
nal R
isk
Hig
hH
igh
Poor
- Fo
llow
up
lett
ers w
ill b
e se
nt to
the
non-
subm
ittin
g ag
ents
to c
omm
unic
ate
thei
r no
n-co
mpl
ianc
e in
term
s of
the
bind
er a
gree
men
ts a
nd
initi
al re
ques
t for
subm
issi
on o
f po
licy
hold
er d
ata
as p
revi
-ou
sly
requ
este
d. a
gent
s will
be
mad
e aw
are
of o
ur re
quire
-m
ent t
o in
form
the
FSB
on
thei
r non
-com
plia
nce.
- N
on-c
ompl
ianc
e w
ill b
e re
port
ed to
the
FSB
with
in a
m
onth
aft
er th
e fo
llow
up
let-
ters
hav
e be
en se
nt.
- In
add
ition
to th
e ab
ove
to sp
eed
up th
e pr
oces
s, an
ad
ditio
nal a
venu
e w
ill b
e ex
plor
ed w
ith sy
stem
pro
vid-
ers t
o es
tabl
ish
if th
e re
quire
d in
form
atio
n ca
n be
obt
aine
d di
rect
ly fr
om th
em.
Hig
hM
ediu
mFa
irEx
ecut
ive
Man
ager
: H
uman
Cap
ital
Cons
ulta
nts
or te
mpo
rary
st
aff a
re u
sed
whe
re v
acan
-ci
es e
xist
. Whe
n te
mpo
rary
st
aff a
re e
mpl
oyed
for m
ore
than
thre
e m
onth
s th
e le
gal
depa
rtm
ent i
s co
nsul
ted.
Ensu
re th
at te
mpo
rary
sta
ff ar
e m
anag
ed w
ithin
the
thre
e m
onth
s re
gula
tory
per
iod.
App
oint
men
t and
on
boar
ding
che
cklis
t com
plet
-ed
, sig
ned
off b
y re
leva
nt
man
agem
ent a
nd re
view
ed.
Corp
orat
e W
elln
ess
pro-
gram
me
is u
sed.
The
corp
orat
e w
elln
ess
plan
is
in th
e pr
oces
s of
bei
ng ro
lled
out.
Crea
ting
succ
essi
on p
ools
fo
r key
pos
ition
s in
the
com
pany
.
Tale
nt a
nd L
eade
r Man
age-
men
t pra
ctic
es a
re in
pla
ce
to e
nsur
e be
st p
ract
ice
in
the
com
pany
.
#R
isk
Na
me
Ris
k C
lass
ifi c
ati
on
Inh
ere
nt
Ris
kR
esi
du
al
Ris
kO
ve
rall
C
on
tro
l E
ff e
ctiv
en
ess
Re
spo
nsi
ble
E
xe
cu
tiv
e
Ma
na
ge
r
Co
ntr
ol
Ke
y a
cti
on
s w
he
re c
on
tro
ls a
re
no
t e
ff e
cti
ve
Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019 | 5958 | Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019
Hig
hM
ediu
mFa
ir
Empl
oyee
s are
all
coac
hed
whi
le th
ey a
re o
n th
e jo
b an
d th
ere
are
deve
lopm
ent
plan
s in
plac
e fo
r eac
h em
ploy
ee. T
he e
mpl
oyee
s’ KP
Is a
nd P
DPs
are
agr
eed
on
annu
ally
and
cap
ture
d on
th
e Pa
yspa
ce sy
stem
. The
y ar
e re
view
ed b
i-ann
ually
.
Posi
tions
are
fi lle
d w
ithin
in
thre
e m
onth
s for
non
-key
po
sitio
ns a
nd k
ey p
osi-
tions
are
fi lle
d w
ithin
nin
e m
onth
s.
Exit
inte
rvie
w re
sults
.
Qua
lity
recr
uitm
ent s
ervi
ce
prov
ider
s are
use
d to
ens
ure
that
the
best
em
ploy
ees a
re
recr
uite
d. C
urre
nt se
rvic
e pr
ovid
ers w
ere
eval
uate
d ag
ains
t crit
eria
, loo
ked
at
addi
tiona
l age
ncie
s and
m
eetin
gs h
ave
been
hel
d.
Ther
e is
a p
ropo
sed
list t
hat
is c
ompi
led.
#R
isk
Na
me
Ris
k C
lass
ifi c
ati
on
Inh
ere
nt
Ris
kR
esi
du
al
Ris
kO
ve
rall
C
on
tro
l E
ff e
ctiv
en
ess
Re
spo
nsi
ble
E
xe
cu
tiv
e
Ma
na
ge
r
Co
ntr
ol
Ke
y a
cti
on
s w
he
re c
on
tro
ls a
re
no
t e
ff e
cti
ve
#R
isk
Na
me
Ris
k C
lass
ifi c
ati
on
Inh
ere
nt
Ris
kR
esi
du
al
Ris
kO
ve
rall
C
on
tro
l E
ff e
ctiv
en
ess
Re
spo
nsi
ble
E
xe
cu
tiv
e
Ma
na
ge
r
Co
ntr
ol
Ke
y a
cti
on
s w
he
re c
on
tro
ls a
re
no
t e
ff e
cti
ve
6Er
osio
n of
cap
ital d
ue to
de
terio
ratio
n of
inve
stm
ent
mar
kets
Mar
ket R
isk
Hig
hM
ediu
mFa
irFi
nanc
e D
irect
or
Inve
stm
ent m
anda
tes a
re
com
pile
d w
ith re
gard
s to
the
inve
stm
ent p
olic
y (ri
sk/
allo
catio
n). T
his e
nsur
es th
at
that
ass
et m
anag
ers o
nly
inve
st in
cer
tain
inst
rum
ents
. Th
e in
vest
men
t man
date
s ar
e m
onito
red
by th
e In
vest
-m
ent A
ccou
ntan
t to
ensu
re
that
bre
ache
s are
iden
ti-fi e
d an
d lo
sses
reco
rded
. A
repo
rt is
pre
pare
d fo
r th
e Fi
nanc
e D
irect
or o
n a
mon
thly
bas
is.
Hig
hM
ediu
mFa
ir
Inve
stm
ent p
olic
y st
ate-
men
t lim
its th
e us
e of
hig
h ris
k in
stru
men
ts li
miti
ng th
e lo
sses
that
can
be
suff e
red
durin
g a
dete
riora
ting
mar
ket.
The
inve
stm
ents
are
co
ntin
uous
ly m
onito
red
by
the
Inve
stm
ent A
ccou
ntan
t to
iden
tify
any
non-
com
pli-
ance
. A re
port
is p
repa
red
for t
he F
inan
ce D
irect
or o
n a
mon
thly
bas
is.
Qua
rter
ly in
vest
men
t re
port
bac
k se
ssio
ns b
y In
vest
men
t Man
ager
s to
co
mm
unic
ate
perf
orm
ance
an
d fu
ture
str
ateg
ies.
Each
qu
arte
r an
asse
t man
ager
is
invi
ted
to p
rese
nt o
n af
ore-
men
tione
d to
the
Inve
st-
men
t Com
mitt
ee.
Stra
tegi
c as
set a
lloca
tion
prep
ared
bas
ed o
n Sa
sria
’s ris
k ap
petit
e an
d re
turn
ob
ject
ives
and
app
rove
d by
th
e Bo
ard
of D
irect
ors.
Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019 | 6160 | Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019
Stan
dard
Ban
k is
Sas
ria’s
sing
le c
usto
dian
and
pe
rfor
ms
its in
vest
men
t ad
min
istr
atio
n se
rvic
es.
Stan
dard
Ban
k re
cord
s al
l tr
ades
and
reco
ncile
s to
the
asse
t man
ager
s’ ac
coun
ts
on a
mon
thly
bas
is. S
tan-
dard
Ban
k pr
epar
es a
con
-so
lidat
ed re
port
and
rela
ted
inve
stm
ent j
ourn
als
whi
ch
the
fi nan
ce d
epar
tmen
t pr
oces
ses
in G
reat
Pla
ins.
The
Inve
stm
ent A
ccou
ntan
t th
en p
erfo
rms
a re
conc
ili-
atio
n be
twee
n th
e co
nsol
i-da
ted
Stan
dard
Ban
k re
port
an
d th
e G
ener
al L
edge
r.
Hig
hM
ediu
mFa
ir
An
annu
al d
ue d
ilige
nce
revi
ew is
con
duct
ed o
n al
l Sas
ria a
sset
man
ager
s. A
due
dili
genc
e re
port
is
prep
ared
whi
ch p
rovi
des
high
leve
l fee
dbac
k on
ea
ch o
f the
ass
et m
anag
ers
revi
ewed
and
the
sam
e is
re
port
ed to
the
Inve
stm
ent
Com
mitt
ee o
f Sas
ria. T
his
give
s Sa
sria
com
fort
ove
r th
e st
reng
th o
f the
ass
et
man
ager
s’ co
ntro
l env
iron-
men
t, pe
rfor
man
ce re
sults
an
d ab
ility
to c
ontin
ue a
s a
goin
g co
ncer
n.
The
inve
stm
ent f
unct
ion
prov
ides
the
data
requ
ired
to p
erfo
rm th
e m
arke
t an
d cr
edit
risk
expo
sure
ca
lcul
atio
ns, t
o th
e ac
tuar
ial
depa
rtm
ent w
ho p
erfo
rms
the
calc
ulat
ions
.
#R
isk
Na
me
Ris
k C
lass
ifi c
ati
on
Inh
ere
nt
Ris
kR
esi
du
al
Ris
kO
ve
rall
C
on
tro
l E
ff e
ctiv
en
ess
Re
spo
nsi
ble
E
xe
cu
tiv
e
Ma
na
ge
r
Co
ntr
ol
Ke
y a
cti
on
s w
he
re c
on
tro
ls a
re
no
t e
ff e
cti
ve
Hig
hM
ediu
mFa
ir
The
Inve
stm
ent P
olic
y,
whi
ch in
clud
es th
e in
vest
-m
ent s
trat
egy
and
the
stra
tegi
c as
set a
lloca
tion,
is
revi
ewed
and
upd
ated
by
the
Fina
nce
Dire
ctor
in c
on-
junc
tion
with
the
actu
aria
l te
am a
nd th
e as
set c
onsu
l-ta
nt, a
nd th
en su
bmitt
ed to
th
e Ex
ecut
ive
Com
mitt
ee
and
the
Inve
stm
ent C
om-
mitt
ee fo
r rev
iew
and
rec-
omm
enda
tion
to th
e Bo
ard
of D
irect
ors f
or a
ppro
val.
All
inve
stm
ents
are
gov
erne
d by
the
sam
e po
licy.
The
quan
tifi c
atio
n of
mar
ket
risk
and
cred
it ris
k ex
posu
re
is c
alcu
late
d by
the
actu
aria
l de
part
men
t qua
rter
ly a
nd
revi
ewed
by
the
Chie
f Ris
k O
ffi ce
r and
Fin
ance
Dire
ctor
. Si
gned
off
by h
ead
of a
ctu-
aria
l dep
artm
ent.
Revi
ew a
nd re
conc
iliat
ion
of
inve
stm
ents
hel
d by
Sas
ria.
The
perf
orm
ance
of a
sset
m
anag
ers i
s mon
itore
d an
d re
port
ed b
y th
e in
vest
men
t ac
coun
tant
to th
e Fi
nanc
e D
irect
or a
nd In
vest
men
t Co
mm
ittee
on
mon
thly
and
qu
arte
rly b
asis
resp
ectiv
ely.
#R
isk
Na
me
Ris
k C
lass
ifi c
ati
on
Inh
ere
nt
Ris
kR
esi
du
al
Ris
kO
ve
rall
C
on
tro
l E
ff e
ctiv
en
ess
Re
spo
nsi
ble
E
xe
cu
tiv
e
Ma
na
ge
r
Co
ntr
ol
Ke
y a
cti
on
s w
he
re c
on
tro
ls a
re
no
t e
ff e
cti
ve
Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019 | 6362 | Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019
7Cy
ber s
ecur
ity ri
skO
pera
tiona
l Ris
kH
igh
Med
ium
Fair
Exec
utiv
e M
an-
ager
: Bus
ines
s O
pera
tions
and
In
form
atio
n Te
ch-
nolo
gy
Fire
wal
ls a
re d
eplo
yed
on
the
perim
eter
net
wor
k w
hich
scre
en in
com
ing
and
outg
oing
traffi
c. W
here
serv
-er
s are
acc
essi
ble
to u
sers
ou
tsid
e of
Sas
ria, a
s in
the
case
of t
he c
usto
mer
web
po
rtal
, a d
emili
taris
ed z
one
(DM
Z), w
hich
rest
rict t
he a
c-ce
ss to
info
rmat
ion
avai
labl
e to
thes
e us
ers i
s use
d. A
ll au
then
ticat
ion
is h
andl
ed b
y SS
L se
curit
y ce
rtifi
cate
s.
The
cybe
r dia
gnos
tic a
sses
smen
t an
d in
tern
al a
nd e
xter
nal v
ulne
r-ab
ility
/pen
etra
tion
test
has
bee
n pe
rfor
med
by
PWC.
A se
cond
te
st is
sche
dule
d fo
r Feb
ruar
y 20
18.
Acce
ss c
ontr
ol is
mon
itore
d an
d lo
gon
cred
entia
ls
regu
larly
upd
ated
. Ant
iviru
s so
ftw
are
is in
stal
led
on a
ll co
mpu
ters
and
serv
ers a
nd
upda
ted
daily
.
Dai
ly b
acku
ps o
f all
data
w
hich
can
be
rest
ored
in
the
even
t tha
t a c
yber
at-
tack
resu
lts in
lost
dat
a or
co
rrup
tion.
Sas
ria a
lso
has
an o
ff -si
te re
cove
ry c
entr
e w
here
bac
k-up
s are
stor
ed.
Dis
aste
r rec
over
y te
stin
g is
pe
rfor
med
bi-a
nnua
lly. A
ll sy
stem
s mus
t be
rest
ored
w
ithin
8 h
ours
dur
ing
thes
e te
sts.
#R
isk
Na
me
Ris
k C
lass
ifi c
ati
on
Inh
ere
nt
Ris
kR
esi
du
al
Ris
kO
ve
rall
C
on
tro
l E
ff e
ctiv
en
ess
Re
spo
nsi
ble
E
xe
cu
tiv
e
Ma
na
ge
r
Co
ntr
ol
Ke
y a
cti
on
s w
he
re c
on
tro
ls a
re
no
t e
ff e
cti
ve
8Fa
ilure
to c
ompl
y w
ith re
gu-
lato
ry re
quire
men
ts a
nd
gove
rnan
ce c
odes
Ope
ratio
nal R
isk
Hig
hM
ediu
mFa
ir
Exec
utiv
e M
an-
ager
Gov
erna
nce
& Co
mpa
ny S
ecre
-ta
riat
Com
plia
nce
Man
agem
ent
KPI f
or a
ll m
anag
ers i
n Sa
sria
to
ens
ure
that
the
man
ager
s m
ake
it a
prio
rity
to e
nsur
e th
at th
eir d
epar
tmen
ts c
om-
ply
with
law
s and
regu
la-
tions
. The
KPI
s are
ass
esse
d an
d ra
ted
bi-a
nnua
lly.
The
Reco
rds M
anag
emen
t and
Re
tent
ion
Polic
y w
as a
ppro
ved
by th
e Bo
ard
of D
irect
ors o
n 11
June
201
5 an
d tr
aini
ng w
as
give
n to
all
staff
. Th
e im
ple-
men
tatio
n of
the
polic
y w
ill b
e m
onito
red
as th
ere
are
vario
us
new
pro
cess
es th
at n
eed
to b
e pu
t in
plac
e in
ord
er to
com
ply
with
the
polic
y.
The
Boar
d no
tice
158
of 2
015
on
fi t a
nd p
rope
r req
uire
men
ts h
as
been
gaz
ette
d. T
he B
oard
Not
ice
is e
ff ect
ive
from
1 O
ctob
er 2
015
and
Sasr
ia h
as 6
mon
ths t
o al
ign
the
Fit a
nd P
rope
r Pol
icy
with
the
boar
d no
tice.
The
Fit
& Pr
oper
ch
ecks
for a
ll re
spon
sibl
e pe
r-so
ns w
ill b
e do
ne in
qua
rter
4.
Prim
ary
and
seco
ndar
y ac
ts
(as p
er C
ompl
ianc
e re
gist
er).
SAM
- O
RSA
and
CPR
(In
clud
ed se
para
tely
due
to
assu
ranc
e th
at n
eeds
to b
e pr
ovid
ed).
All
new
and
pro
pose
d pi
eces
of
legi
slat
ion
are
revi
ewed
fo
r the
ir im
pact
on
Sasr
ia
and
actio
ns a
re d
iscu
ssed
an
d al
loca
ted.
All
regu
lato
ry a
nd g
over
-na
nce
requ
irem
ents
are
ca
ptur
ed in
pol
icie
s. N
on-
com
plia
nce
with
pol
icie
s co
nstit
utes
mis
cond
uct a
s de
fi ned
in th
e H
C po
licie
s an
d ca
n re
sult
in d
isci
plin
ary
actio
n.
Trai
ning
and
Aw
aren
ess
inte
rven
tions
on
regu
latio
n re
quire
men
ts is
don
e du
ring
Gov
erna
nce
Wee
k an
nual
ly.
Cont
rol R
isk
Man
agem
ent
Plan
wor
ksho
ps a
re a
lso
held
.
#R
isk
Na
me
Ris
k C
lass
ifi c
ati
on
Inh
ere
nt
Ris
kR
esi
du
al
Ris
kO
ve
rall
C
on
tro
l E
ff e
ctiv
en
ess
Re
spo
nsi
ble
E
xe
cu
tiv
e
Ma
na
ge
r
Co
ntr
ol
Ke
y a
cti
on
s w
he
re c
on
tro
ls a
re
no
t e
ff e
cti
ve
Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019 | 6564 | Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019
9N
on-c
ompl
ianc
e of
cla
ims
staff
with
cla
ims
man
ual
and
proc
edur
esO
pera
tiona
l Ris
kM
ediu
mM
ediu
mFa
irEx
ecut
ive
Man
-ag
er: I
nsur
ance
O
pera
tions
Qua
rter
ly a
d-ho
c au
dit o
f cl
aim
fi le
s by
an
inde
pen-
dent
con
sulta
nt a
nd th
e fi n
ding
s ar
e fo
llow
ed u
p an
d th
e im
prov
emen
t is
mon
itore
d.
The
clai
ms
impr
ovem
ent p
roje
ct
is in
pro
gres
s.
Form
al p
roce
sses
hav
e be
en
docu
men
ted
to e
nsur
e th
at
all p
roce
dure
s ar
e co
mpl
eted
w
ithou
t dup
licat
ion.
A c
hang
e re
ques
t has
bee
n co
mpl
eted
to a
void
dup
licat
e cl
aim
pay
men
ts.
A c
hang
e re
ques
t has
bee
n co
mpl
eted
to e
nsur
e th
at s
al-
vage
s ar
e fl a
gged
.
Wee
kly
clai
ms
revi
ew
mee
tings
are
hel
d to
ens
ure
com
plia
nce
with
the
clai
ms
man
ual.
Revi
ew o
f mon
th e
nd
repo
rts
incl
udin
g th
e cl
aim
s es
timat
e re
view
and
exc
ep-
tion
repo
rts.
Segr
egat
ion
of d
utie
s w
hen
proc
essi
ng a
nd p
ayin
g cl
aim
s.
The
clai
ms
reje
ctio
n le
tter
s ar
e m
onito
red.
The
lett
er
cont
ains
det
ails
of w
here
co
mpl
aint
s ca
n be
logg
ed.
Set m
anda
te o
n IM
S sy
stem
en
sure
s th
at c
laim
s ar
e pr
o-ce
ssed
by
the
corr
ect s
taff
mem
bers
.
The
clai
m is
vie
wed
by
the
adm
inis
trat
or, a
lloca
ted
to th
e cl
aim
s co
ntro
ller,
revi
ewed
by
the
clai
ms
con-
trol
ler a
nd th
e se
nior
cla
ims
cont
rolle
r.
#R
isk
Na
me
Ris
k C
lass
ifi c
ati
on
Inh
ere
nt
Ris
kR
esi
du
al
Ris
kO
ve
rall
C
on
tro
l E
ff e
ctiv
en
ess
Re
spo
nsi
ble
E
xe
cu
tiv
e
Ma
na
ge
r
Co
ntr
ol
Ke
y a
cti
on
s w
he
re c
on
tro
ls a
re
no
t e
ff e
cti
ve
Le
ge
nd
:
Inhe
rent
risk
ratin
gs:
Na
vy
(V
ery
Hig
h R
isk
)
Und
erta
ke a
man
agem
ent r
evie
w o
f cur
rent
con
trol
s to
iden
tify
pote
ntia
l opt
ions
for m
itiga
tion
ac-
tion.
Re
d (
Hig
h R
isk
)
Und
erta
ke a
man
agem
ent r
evie
w o
f cur
rent
con
trol
s to
iden
tify
pote
ntia
l opt
ions
for m
itiga
tion
ac-
tion.
Am
be
r (M
ed
ium
Ris
k)
Revi
ew a
nd ta
ke a
ctio
n to
iden
tify
and
esta
blis
h ap
prop
riate
cos
t eff e
ctiv
e co
unte
rmea
sure
s.
Lig
ht
Am
be
r (L
ow
Ris
k)
Nee
d to
be
mon
itore
d to
ens
ure
that
pot
entia
l im
pact
doe
s no
t inc
reas
e.
Cont
rol e
ff ect
iven
ess:
De
sig
n a
de
qu
ac
y
Doe
s no
t ade
quat
ely
addr
ess
unde
rlyin
g ris
k fa
ctor
and
/or c
osts
of i
mpl
emen
ting
the
cont
rol a
re p
rohi
bitiv
e.Im
ple
me
nta
tio
n e
ff e
cti
ve
ne
ss
Cont
rol n
ot a
dequ
atel
y em
bedd
ed/e
xecu
ted.
De
sig
n a
de
qu
ac
y
Cont
rol d
oes
not f
ully
add
ress
the
unde
rlyin
g ris
k at
a re
ason
able
cos
t.Im
ple
me
nta
tio
n e
ff e
cti
ve
ne
ss
Cont
rol r
equi
res
impr
ovem
ent a
s is
not
fully
em
bedd
ed.
De
sig
n a
de
qu
ac
y
Cont
rol a
ddre
sses
und
erly
ing
risk
at a
reas
onab
le c
ost.
Imp
lem
en
tati
on
eff
ec
tiv
en
ess
Cont
rol i
s ad
equa
tely
em
bedd
ed/e
xecu
ted.
10Fa
ilure
to a
ccur
atel
y ca
lcu-
late
VAT
Ope
ratio
nal R
isk
Med
ium
Med
ium
Fair
Fina
nce
Dire
ctor
All
fi nan
cial
acc
ount
ants
at
tend
s in
com
e ta
x an
d VA
T tr
aini
ng a
nnua
lly.
Writ
ten
disp
ensa
tion
has
been
re
ceiv
ed fr
om S
ARS
aft
er v
erba
l co
nfi rm
atio
n th
at n
o pe
nalti
es
will
be
char
ged
to S
asria
if th
ey
cont
inue
to p
ay O
utpu
t VAT
on
GW
P on
an
estim
atio
n ba
sis.
Com
mun
icat
ion
to a
gent
s on
di
sclo
sure
of V
AT h
as b
een
sent
ou
t.
Mon
thly
tax
calc
ulat
ions
(In
com
e Ta
x an
d VA
T) p
er-
form
ed b
y th
e Ac
coun
tant
/Bo
okke
eper
and
revi
ewed
by
the
Stat
utor
y Re
port
-in
g M
anag
er a
nd F
inan
ce
Dire
ctor
.
#R
isk
Na
me
Ris
k C
lass
ifi c
ati
on
Inh
ere
nt
Ris
kR
esi
du
al
Ris
kO
ve
rall
C
on
tro
l E
ff e
ctiv
en
ess
Re
spo
nsi
ble
E
xe
cu
tiv
e
Ma
na
ge
r
Co
ntr
ol
Ke
y a
cti
on
s w
he
re c
on
tro
ls a
re
no
t e
ff e
cti
ve
Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019 | 6766 | Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019
ANNEXURE 4: FRAUD PREVENTION PLAN
1. Introduction
Sasria SOC Ltd (Sasria) values the integrity and eff orts of all its employees in dealing with suppliers, stakeholders and other employees. To this end Sasria has adopted these organisational values that are embedded in the business and also form part of staff performance measurements: professionalism, integrity, teamwork, innovation and customer centricity.
Sasria supports and fosters a culture of zero tolerance for the commission or concealment of fraudulent or illegal acts. Al-legations of such acts will be investigated and pursued to their logical conclusion, including legal action, criminal prosecu-tion, and disciplinary action where warranted.
Being cognisant of its responsibility for setting the tone for eff ective leadership based on an ethical foundation, the Sasria Board accepts the need to manage organisational ethics and integrity, to build an ethical corporate culture that is zero tol-erant to fraud. All Sasria employees have a responsibility with respect to the fi ght against fraud and other illegal acts. In this light Sasria employees are specifi cally prohibited from participating in anything that involves fraud and/or illegal activities. The Board has adopted the following ethics promotion/anti–fraud policies: Confl ict of Interest Management Policy, Fraud Prevention and Whistleblowing Policy, Ethics Management Policy, Fit and Proper Requirements Policy.
The Social and Ethics Committee of the Board is mandated by the Board to drive ethics and anti – fraud promotion in the organisation. In terms of its charter, this committee drives Sasria’s standing in terms of the goals and purposes of – - The anti–corruption protocols of the Organisation for Economic Development.- Good Corporate Citizenship, including promotion of equality, prevention of unfair discrimination and reduction of
corrupt activities.
The Social and Ethics Committee further reports to the Shareholder through its Chairperson at the Annual General Meeting of Sasria in terms of the Companies Act 2008. In this regard the Committee submits a formal written report on its activities for the fi nancial year under review.
The fraud prevention plan (fraud plan) is reviewed annually to incorporate relevant changes in the operating environment. The fraud prevention plan is included in the Sasria annual corporate plan to the Shareholder.
2. Purpose of the Fraud Prevention Plan
The purpose of the fraud prevention plan is to provide:• Guidelines within the existing legal framework, to deal with fraud and corruption within Sasria• An outline of what may constitute fraud, theft, corruption and dishonesty, and to detail the procedures where these
acts are suspected or discovered• An overview of Sasria’s approach to the prevention and detection of fraud and corruption.
3. Scope of the Fraud Prevention Plan
The fraud plan applies to any actual or suspected acts of fraud, theft, corruption and dishonesty involving all Sasria’s employees as well as consultants, vendors, contractors, employees with outside agencies and/or any other stakeholders having a business relationship with Sasria. Crime in its broadest defi nition will not be tolerated, irrespective of a person’s position or number of years of service, and will be uniformly and severely dealt with.
4. Defi nition of Fraud & Corruption
4.1 Fraud
The legal defi nition of fraud is based on South African law. For the purpose of this plan, fraud is defi ned as:“Any unlawful act or omission by which a misrepresentation is made with the intention to defraud, which causes actual prejudice or which is potentially prejudicial to another, whether or not there is personal benefi t to the perpetrator.”
Fraud can be perpetrated either internally by persons within the employment of the Sasria, or by clients or other external third parties.The Prevention and Combating of Corrupt Activities Act, No. 12 of 2004, provides that “any person who gives or accepts or agrees or off ers to accept or receives any gratifi cation from another person in order to infl uence such other person in a manner that amounts to”:The illegal or unauthorised performance of such other person’s powers, duties or functions;• An abuse of authority, a breach of trust, or the violation of a legal duty or set of rules;• The achievement of an unjustifi ed result; or• Any other unauthorised or improper inducement to do or not to do anything is guilty of the off ence of corruption.
4.2 Corruption
For purposes of the Sasria fraud plan, corruption is defi ned as lack of integrity or honesty (especially susceptibility to brib-ery) including use of a position of trust for dishonest gain.
The fraud prevention plan in summary prohibits:“the abuse of a position of employment to gain an advantage in contravention of duty. It includes the off ering/giving/soliciting or accepting of an inducement or reward for certain improper actions and any improper approach or solicitation, either directly or through a nominee to act in any way which could be to Sasria’s disadvantage”.
Forms of Corruption
Bribery – involves the promise, off ering or giving of a benefi t that improperly aff ects the actions or decisions of public servants.Embezzlement – this involves theft of resources by persons who control such resources.Fraud – Any conduct or behaviour of which a dishonest representation and/or appropriation forms an element.Extortion – Coercion of a person or entity to provide a benefi t to a public servant, another person or an entity, in exchange for acting or failing to act in a particular manner.Abuse of power – The use by a public servant of his or her vested authority to improperly benefi t another public servant, person or entity or using the vested authority to improperly discriminate against another public servant, person or entity.Confl ict of interest – The failure by a public servant to act or to consciously fail to act on a matter where the public servant has an interest or another person or entity that has some form of relationship with the public servant has an interest.Abuse of privileged information – This involves the use, by a public servant of privileged information and knowledge that a public servant possesses as a result of his or her offi ce to provide unfair advantage to another person or entity to obtain a benefi t.Favouritism – The provision of services or resources according to personal affi liation of a public servant.Nepotism – A public servant ensuring that family members are appointed to public service positions or that family mem-bers receive contracts from the State is regarded as nepotism.
5. Regulatory Framework
5.1 Public Finance Management Act, No. 1 of 1999, as amended
This Act requires accounting authority of a public entity to exercise utmost care, act with fi delity, honesty and integrity, disclose all material facts, including those reasonably discovered, and seeks to prevent any prejudice to the fi nancial inter-ests of the state. The accounting authority must also ensure that there is an eff ective, effi cient and transparent system of internal audit and risk management, fi nancial and internal control.
5.2 Prevention and Combating of Corrupt Activities Act, No. 12 of 2004
This Act provides for the strengthening of measures to prevent and combat corruption and corrupt activities; and also outlines the off ences in respect of corruption and off ences relating to corrupt activities.
Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019 | 6968 | Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019
5.3 Prevention of Organised Crime Act, No. 121 of 1998 (POCA)
This Act contains provisions that are aimed at achieving the following:• The combating of organised crime, money laundering and criminal gang activities.• The criminalisation of conduct referred to as “racketeering”.• The provision of mechanisms for the confi scation and forfeiture of the proceeds of crime.• The creation of mechanisms for the National Director of Public Prosecutions to obtain certain information required
for the purposes of an investigation; and• The creation of mechanisms for co-operation between investigators and the South African Receiver of Revenue.
5.4 Financial Intelligence Centre Act, No. 38 of 2001 (FICA)
The Act establishes a Financial Intelligence Centre and a Money Laundering Advisory Council. The purpose of these entities is to combat money laundering activities.
5.5 Protection of Constitutional Democracy Against Terrorist and Related Activities Act, No. 33 of 2004
The Act criminalises terrorist activities and terrorist fi nancing and gave Government investigative and asset seizure powers in cases of suspected terrorist activity.
5.6 Protected Disclosures Act, No. 26 of 2000
The Act facilitates reporting by employees of fraud, corruption or other unlawful or irregular actions by their employers or co-employees without fear of any discrimination or reprisal by their employers or co-employees.
6. Fraud and Corruption Strategies
6.1 Structural Strategies – The actions to be undertaken in order to address fraud and corruption at a structural level.
6.1.1 Board of Directors – The Board of Directors bears the ultimate responsibility for management of fraud, corruption and risk within Sasria. This includes the coordination of risk assessments, overseeing the investigation of suspected fraud and corruption, and facilitation for the reporting of such instances.
6.1.2 An ethical culture – Sasria is required to conduct itself in an ethical and moral way. Ethical conduct is based on a set of principles referred to as values and norms. The collective ethical conduct of all the individual employees of Sasria refl ects Sasria’s ethical conduct. Good governance indicates that institutions should develop code of conduct as part of their cor-porate governance frameworks. All employees are expected to abide by the Code of Conduct of Sasria.
6.1.3 Executive Management Commitment – The Executive Management of Sasria is committed to eradicating fraud and corruption and ensuring that Sasria strives to be perceived as ethical in all its dealings with the public and other interested parties. Senior management will also ensure that all the employees and stakeholders are made aware of its overall anti-fraud and corruption activities through various initiatives of awareness and training.
6.2 Operational Strategies
6.2.1 Internal Controls – Internal controls are the fi rst line of defence against fraud and corruption. These are essential ele-ments in the overall Anti-Fraud and Corruption Strategy. The Internal Audit Department will be responsible for implement-ing an audit program which will incorporate steps to evaluate adherence to internal controls.
6.2.2 Employee Awareness – Awareness of Sasria’s Anti-Fraud and Corruption Strategy, Code of Conduct, Whistle Blowing policy and the manifestation of fraud and corruption in the workplace will assist in the creation of an environment which may be considered to be hostile to a would-be transgressor.
6.2.3 Pre-employment Screening and Recruitment Procedures – To be carried out for all the appointments, and evi-dence of such screening will be maintained by the Human Capital Department. Recruitment will be conducted in accor-dance with the requisite recruitment procedures.
6.2.4 Internal Audit Plan – A robust internal Audit Plan which focuses on the prevalent high fraud and corruption risk serves as an eff ective preventative measure.
6.2.5 Fraud and Corruption Prevention Plan – The actions set out in this plan are all focused at mitigating the risk of fraud and corruption in the company.
6.2.6 Disclosure of Interest – All Sasria Directors and staff are required to annually disclose their business interests. The register of disclosures is kept by the Compliance Offi cer. Disclosure of confl ict of interests is also done at all Board and Com-mittee meetings and management committees and forums at which the employees sit either as members or by invitation.
6.3 Detection Strategies
Detection of fraud and corruption may occur through:• Vigilance on the part of the all employees• The Internal Audit function• Ad hoc management reviews• Anonymous reports• Application of detection techniques• External audits.
6.4 Response Strategies
6.4.1 Reporting fraud and corruption – Fraud prevention and Whistle Blowing Policy.The key obstacle in fi ghting fraud and corruption is the fear by employees of being intimidated to identify any corrupt or unethical practices witnessed at the work place. Those who often do whistle blowing end up being victimised and intimi-dated. For this reason Sasria adopted a Fraud prevention and Whistle Blowing Policy setting out the detailed procedure to be followed in order to report any incidents of fraud and corruption.
6.4.2 Investigating fraud and corruption
In the event when fraud or corruption is detected or suspected, investigations will be initiated, and if warranted, the disci-plinary proceedings, prosecution or action aimed at the recovery of losses will be initiated.
6.5 Maintenance Strategies
6.5.1 Fraud and Ethics Awareness Campaigns
Sasria holds an Ethics Awareness/Anti – Fraud campaign at least annually to ensure that staff members are aware of ethics and fraud prevention strategic within Sasria.Ethics is assigned to the Compliance Function of Sasria, which is responsible for ethics awareness campaigns, ethics aware-ness assessments and initial review of ethics management and fraud prevention policies.
6.5.2 Review of the eff ectiveness of the Anti-Fraud and Corruption Strategy and the Prevention Plan
Sasria will conduct a review of the Anti-Fraud and Corruption Strategy and Prevention to determine the eff ectiveness thereof. The Board of Directors is ultimately accountable for this review and may appoint a person to take the responsibility for this.
6.5.3 Review and updating the Anti-Fraud and Corruption Strategy and Prevention Plan
This will involve ongoing review of fraud and corruption risk exposures. Fraud and Corruption risk assessments should be conducted at the same time as the review of the Anti-Fraud and Corruption Strategy and Prevention Plan. The Board of Directors is accountable for the review and may delegate a person to take the responsibility.
Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019 | 7170 | Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019
NOTES
72 | Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019
Physical address: 36 Fricker Road, Illovo, 2196Postal address: PO Box 653367, Benmore, 2010Tel: +27 11 214 0800Fax: +27 11 447 8630Email: [email protected]: www.sasria.co.za
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