The framework encompasses four distinct categories of risk:

Strategic opportunities and risks   Responsibilities       Reporting risk
  • Identified annually by the Group Chief Executive Officer with reference to the business model and value creation as well as the Group’s objectives
  • Documented in terms of the recommended practices of the King IV Report on Corporate Governance for South Africa 2016 – Risk Governance section
  • Presented to and reviewed by the Risk Management Committee and reassessed quarterly by the committee
  • Quarterly reporting of key performance indicators (KPIs) to the Risk Management Committee (Refer business model and value creation).
  
  • Ad hoc management
  • Board of Directors
  • Risk Management Committee
  • Audit Committee
  • Executive management
   Assurance by internal audit and risk management and Group finance  
  • Responsibility of the Audit Committee
  • Systems of internal control provide reasonable assurance of the validity, accuracy, completeness and timely accumulation of financial data
  • Systems of internal control assessed by internal audit up to general ledger and management reporting level
  • Group Finance ensures internal financial controls are adequate and effective to compile the annual financial statements
  • The Group CEO and Group Financial Director responsibility statement
  • External auditor ensures the fair presentation of financial information at a statutory reporting level.
Operational risk   Responsibilities       Compliance risk
  • Identified annually by the Group Chief Executive Officer with reference to the business model and value creation as well as the Group’s objectives
  • Compared to the “REIT Risk Instrument” universe of risks, which is an internet-based technology risk solution explicitly developed for RSA REITs, after having assessed the probability and likelihood of the risk
  • Key risks documented and presented to and reviewed by the Risk Management Committee
  • Monthly and/or quarterly reporting of KPIs by strategic business units (SBUs), sector or group
  • Quarterly reporting of KPIs to the Risk Management Committee.
  
  • Day-to-day management
  • Executive management
  • Property sectors
  • SBUs
   Assurance by Compliance Officers, Risk Officer and support functions  
  • Primary legislation affecting organisation identified by Company Secretarial function in conjunction with in-house and external legal advisers
  • Where necessary, or if prescribed by legislation, compliance officers appointed to oversee adherence to the relevant Acts
  • Employees are expected to keep abreast of legislation and compliance requirements relevant to their area of responsibility
  • Risk Information Management System (RIMS) technology solution utilised by facilities management personnel every quarter to report on compliance to building regulations, OHS Act and fire regulations
  • Risk Officer dedicated to ensuring compliance to building regulations, OHS Act and fire regulations
  • Inspection of buildings by independent insurers.

Risks on the radar

The following risks have been identified as being prevalent within the operating environment due to the reporting of related activities in the public domain during the financial period. Although not necessarily specific to Growthpoint, the risks warrant commentary on how Growthpoint has acted to mitigate such risks.

1. Environmental
Contributors   Probable impact   Mitigation
  • Deteriorating infrastructure and service delivery
  • Increase in administered costs
  • Increased regulatory requirements
  • Increased attention by funders and investors.
  
  • Additional costs
  • Reputational damage
  • Ability to source funding.
  

Environmental policy

  • Our policy focuses on climate change, carbon emissions, biodiversity and energy, water, waste management and renewable energy.

New developments

  • A responsibility matrix is used which lists, among other things, the regulatory indicators to be considered when undertaking a development
  • New office developments to achieve a minimum 4-Star Green Star SA rating.

Development contractors

  • Where required, the contractor will appoint a consultant who specialises in environmental matters
  • Require adherence in line with Growthpoint’s environmental commitments as part of the procurement process
  • A social and environmental baseline survey conducted to gather all the necessary information and identify any potential gaps in information and uncertainties.

Existing buildings

  • Obtaining green building certification in terms of the GBCSA for office sector properties
  • Identifying suitable solutions in terms of our six-step sustainable change process
  • Engaging and implementing energy-efficient initiatives to reduce utility spend, and sharing savings with the tenant
  • Using the energy and water performance tool developed by GBCSA to benchmark office buildings
  • Waste target of zero organic waste to landfill by 2022
  • Assessing carbon footprint annually, which is externally verified by a third party.

Climate change

  • Tracking of data and the various weather-related incidents to identify preventative initiatives
  • Detailed climate risk review undertaken, identifying scenarios and potential financial impacts
  • Development of carbon-neutral strategy with reduction targets for GHG emissions, energy and water.

Executive remuneration

  • Measure attributable to meeting ESG targets.
2. Social-Growthpoint or greater society
Contributors   Probable impact   Mitigation
  • Macro-economic fundamentals
  • Prolonged effects of Covid-19.
  
  • Political risks
  • Social upheaval.
  

Local community engagement

  • Development of local economic development and transformation strategy policy
  • Engagement with local communities to explore business opportunities at retail centres
  • A social and environmental baseline survey conducted to gather all the necessary information and identify any potential gaps in information and uncertainties.
3. Insurable risks
Contributors   Probable impact   Mitigation
  • Claims on underwriters and insurers excessive as a result of worldwide risk events such as cyber-attacks, climate change and the effects of Covid-19.
  
  • Increase in insurance premiums
  • Lower cover limits
  • Increase in deductibles
  • Uninsurable events such as pandemics.
  

Proactive risk management incorporates, among other things, the following:

Day-to-day operations

Risk Information Management System (RIMS)

  • An online software program focused on property operations, which facilities management personnel complete for each building, each quarter. The results are analysed to identify issues that need management’s attention.

Risk Officer

A dedicated Risk Officer ensures compliance with building and fire compliance regulations as well as the OHS Act by:

  • Regularly performing independent visits to buildings
  • Liaising with tenants when conducting building inspections
  • Liaising with facilities and property management personnel
  • Liaising with insurers.

Independent insurer reviews

  • Growthpoint’s insurers undertake inspections of buildings each year to ensure that the insurable cover is commensurate with the insurable risk that they have underwritten.

Annually

  • The Growthpoint broker approaches the insurance market with regards to cover, limits, deductibles and premiums. The resultant decisions taken by management are relayed to the Risk Management Committee for consideration and approval.