2020 INTEGRATED REPORT

WEAK ECONOMIC ENVIRONMENT DEFINING THE ISSUE: The pandemic has exacerbated the already- constrained economic environment in South Africa. Growth has slipped into negative territory and this will have a knock-on effect on all aspects of life. For PPS, this makes it more challenging to sign up new members, threatens to increase lapse rates, impacts on costs, affects investment returns and can have a negative influence on profitability. Existing members may also choose to reduce their premiums or forego certain products when budgets become restrained. PPS’S RESPONSE: We take a long-term view of wealth creation and focus on delivering lifetime value for our members. A range of asset managers, asset classes and types are used to diversify investment risk, and our portfolios are positioned appropriate to market conditions. This approach yields the best results in the medium to long term, mitigating the negative effects of short-term conditions. Normal economic cycles and key events are taken into account when developing investment strategies to either maximise or mitigate their effect. As far as lapse rates are concerned, retention initiatives are implemented by management on an ongoing basis to mitigate controllable lapses. Costs are also stringently managed. A key focus is on developing initiatives for and to attract the younger graduate market. CYBER-SECURITY DEFINING THE ISSUE: Cyber-security and the risk of our systems being compromised in any way, either through an external attack or through system failure, are two of the most pressing material matters for the business. The risk of cyber-attacks is ever-present and the move to remote working presents unique challenges. This has been confirmed in the recent malicious cyber-attack on the business in March 2021. PPS’S RESPONSE: We constantly review our information management strategy, manage technological development centrally and invest substantially in best-of-breed technology solutions. We do this to secure and grow our business, and also to ensure that we can consistently improve our total member experience. As part of our comprehensive cyber risk management process, we cooperate with worldwide providers and, through a third-party provider, obtain alerts about known and evolving risks. This gives our systems an additional level of security, and greatly assisted in our response to the recent malicious cyber-attack. SUSTAINING STAKEHOLDER VALUE DEFINING THE ISSUE: PPS’s purpose is to create sustainable financial and lifestyle value for members and their families during their working lives and beyond. The principles of mutuality are key considerations in determining our risk appetite as a Group. These principles include endeavouring to ensure inter-generational fairness and operating the business for the benefit of all members without favouring any specific group of members over another. PPS’S RESPONSE: To fulfil this objective, we consistently improve on and expand our range of products and services, which are designed to meet members’ changing needs throughout their lives. Highly qualified and experienced PPS financial advisers not only assist in developing unique financial solutions for each member, but help to minimise the time that busy professionals need to spend on financial planning. We also strive to add value through system, product and service innovation, as well as through our specialist advisory units. MATERIAL MATTERS AND RISK MANAGEMENT | 69