2020 INTEGRATED REPORT

and ethically within legislative parameters to achieve its mandate. PPS risk management – an iterative process applied at strategic, operational and project levels – is integrated throughout all PPS activities. Risks are identified by ascertaining the causes and sources of events, situations or circumstances that could materially impact the group, either positively or negatively. Methods for identifying risk include monitoring the external environment and industry trends; conducting risk-analysis workshops; interviews and analysing various scenarios, data and assumptions, and audits. Risks identified in terms of PPS’s risk management criteria are evaluated for likelihood, consequence and velocity, taking into account the effectiveness of existing controls. All of these factors are combined in order to determine residual risk, which is assessed against PPS’s approved risk appetite. Reasonably foreseeable, emerging and relevant material risks for the Group are reported in various risk registers. These include current and emerging risks and take into account the Group’s long-term strategic targets as well as its risk appetite for each type of risk. Mitigation plans and existing controls are articulated and measured for all risks. The Group’s process of identifying and managing risks typically includes and facilitates:  discussions on how emerging risk scenarios might impact on business strategy;  consideration of key trends and developments in the insurance and wider financial-services industry and the ways in which these could impact on PPS in the future; and  reviewing the emerging risks being experienced by other insurers and/or similar financial-services institutions. In order to manage risk effectively, PPS continuously tracks many different risks on its various risk dashboards and responds to emerging risks as soon as they are identified. The following are the material risks for the Group: RISK MITIGATING ACTIONS 1. Prolonged outbreak of COVID-19  Premium support mechanisms for members  COVID-19-enhanced claims protocols  Regular engagement with employees 2. Extended period of low economic growth  Ongoing implementation of strategic plan by pursuing identified opportunities  Ongoing review of expenditure to identify efficiencies  Monitoring of lapses  Intensified member retention efforts 3. Sustainability  Close monitoring and in-depth analysis of claims experience  Continuous review and update of claims protocols to remain relevant  Ensure appropriate reinsurance and product structures  Implement enhanced member and financial-adviser experience initiatives  Enhance our group brand and market positioning  Product innovations and holistic solutions for members  Legislative compliance  Minimise disruptions to business from the significant volume of proposed legislation and amendments to existing legislation  Responsible Governance  Continue to stay well-informed of external events impacting our members 4. Cyber exposure  Secure IT Platforms  Cyber security plan in place  Security Incident Response Plan in place  Security-awareness programmes for employees 5. Prolonged poor investment performance cycle  Long-term well-diversified investment strategy  Balanced portfolios with international exposure  Multiple asset managers MATERIAL MATTERS AND RISK MANAGEMENT | 71