Currently viewing: Key material risks, controls and strategic imperatives

Key material risks, controls and strategic imperatives

Key material risks, controls and strategic imperatives


1. Network penetration

Risk description     Mitigating controls     Strategic imperatives
  • External penetration of our networks (including hacking, phishing, etc). Probability intensified due to increased web traffic to webstores which are integrated into SAP, ongoing high profile hacking incidents internationally (related to malware), and roll-out of wifi solution for customers in stores.
  • Website cloning and rerouting of online payments gateway via webstores.
  • External penetration of Android-based handheld scanners used in the stores (including hacking, phishing, etc).
  • Increased usage and access points with roll-out of new local stores; East Africa stores and webstores.
  • Prevented with use of firewalls, network data security keys and antivirus software which is continually updated.
  • User passwords regularly updated.
  • Penetration testing performed by external service providers.
  • Segregation of wireless network; integration into Active directory; no longer requires a pre-shared key.
  • Handheld scanners moved to hidden network.
  • Cyber insurance in place through reputable provider.
  • Ongoing evaluation of all network policies and procedures and network and router configurations to assess risks in order to mitigate them.
  • A Protection of Personal Information ("PoPI") compliance project is ongoing to assess areas of risk in order to mitigate them and ensure compliance with the PoPI Act.
  • Continuous improvement of Point of Sale ("POS") encryption with the integrated POS provider.

2. Pace of innovation and agility inadequate

Risk description     Mitigating controls     Strategic imperatives
  • Pace of innovation with smart scanners and functionality in stores and online is not sufficient or fast enough to keep pace with the market and competitors, and other disruptive activities.
  • The Group's Digital Forum meets regularly to discuss and analyse trends and disruptive technologies to ensure that the business is positioned to respond to or introduce innovation into its operations.
  • Members of Digital Forum attend relevant conventions and expos.
  • Ongoing research and development ensuring involvement of key stakeholders will promote relevance of technology/application to the needs of the business.

3. Loss of profitability and/or market share if products do not remain fashionable

Risk description     Mitigating controls     Strategic imperatives
  • Not remaining fashionable is the Group's single biggest risk, and has significant influence on the market share enjoyed by the business.
  • The risk is especially pertinent for age group 35 and below.
  • Customer expectations not satisfied with product offering.
  • Regular regional meetings and strategy sessions held to source insight into markets, receive product feedback and communicate fashion trends, product innovation, merchandise and store improvements, market analysis and opportunities for growth.
  • There are experienced brand/divisional/supply chain managers in the business, who focus on key products and areas.
  • Attendance at international trade fairs.
  • Ongoing cost/pricing adjustments and expansion of distribution channels (eg e-commerce).
  • Store displays and trading space are continually refreshed, and ideas shared across the Group via various mediums (eg operations newsletter).
  • Ongoing "competitor shopping" undertaken.
  • Inventory provisioning process in stores ensures improved product life cycles.
  • BOP utilised to improve in-stock levels of business critical items, and management/exit of slow moving inventory.
  • Work with suppliers and leading experts to ensure 'wow' factor of products and merchandising.
  • Use business information tools to train and motivate operators to innovate and pioneer.
  • BOP continues to improve product lifecycles, thereby ensuring constant responsiveness to evolving fashion.
  • Optimal range/pricing structures will remain a priority.
  • The Group's high-standing among customers is to be maintained by continuing to deliver an offering in line with customer demand. In this regard, continuous improvement in the approach to product research and development is crucial.

4. Staff inadequately trained

Risk description     Mitigating controls     Strategic imperatives
  • Individuals are not adequately trained/developed, and succession planning may be inadequate.
  • The Group conducts various training courses and operates an established Tiling and Plumbing Academy. Training spend is significant.
  • Divisional management and the executive directors of the Group are closely involved in the operations of the business and regular regional meetings are held, as well as other regular interactions.
  • The business implements Career Advancement Training which comprises its Leadership Development Programme, Operator Training Programme ("OTP") and other university-affiliated courses.
  • The Group has a culture of developing and promoting from within, and various initiatives and programmes are in place to foster this.
  • Employee engagement surveys are conducted and reviewed by Group management.
  • E-learning platforms are in place with Group and retail-specific content.
  • Instil greater retail-specific focus in training and development programmes; attract and retain key talent through promoting business partnerships; and encourage commitment to business success through development programmes and remuneration and reward strategies.
  • OTP will continue to serve as an important mechanism to build leadership capacity in the Group.
  • Enhanced e-learning initiatives will improve training in outlying and rural areas.
  • Building of additional capacity in the Human Resource department with particular focus on the Group's three retail brands.

5. Social unrest impacting operations

Risk description     Mitigating controls     Strategic imperatives
  • Social unrest in the areas in which the Group operates impacts retail and manufacturing activities.
  • The risk is particularly relevant for the Ceramic Industries' factories and TopT retail stores.
  • Impacts on safety of Group employees and customers.
  • Business interruption insurance cover in place.
  • The portfolio and marketplace are analysed on an ongoing basis to ensure risk is mitigated and targeted property returns are achieved.
  • The Group has a Social Unrest policy in place primarily focused on the safety of Group employees and customers.
  • Ongoing community engagement and social economic development activities in communities in which we operate.
  • Continuous investment in and management of relationships with communities within which we operate.