Risk Management

The board recognises that the proactive engagement of risk is an essential aspect of the group’s core business and is thus fully committed to and accountable for an effective risk management process that mitigates exposure to losses and enhances exposure to opportunities by identifying, understanding and managing risks in accordance with a defined risk management strategy. A formal strategy document defines the group’s risk management objectives, its risk management structure, and the roles and responsibilities of the board, the risk committee, a risk facilitator, management, the executive committee, the audit committee and internal audit.

In pursuance of risk management objectives, the board undertakes to:

  • openly disclose, both internally and externally, the risk management process to ensure that stakeholders view the group as a transparent organisation;
  • ensure the establishment of awareness and understanding of the risk management framework at the appropriate levels of the organisation;
  • constantly identify, manage, monitor and report on risk; and
  • hold management accountable for the effective management of those risks.

To ensure that the risk management process is effective, the board

  • executes the process under the governance of a risk management strategy, the key components of which are documented in the risk management strategy document;
  • identifies risks through an objective driven process, which assesses the impact that risks would have on the achievement of the objectives of the organisation; and
  • has a clearly defined responsibility structure.

Risk assessment workshops are held annually and risk management is a standing item on the quarterly executive committee meeting agenda. The key strategic risks identified during workshops and meetings, together with current and planned actions to mitigate these risks, have been summarised in the table below and opposite. The board appoints the risk committee to assist it in carrying out its responsibilities in relation to risk management, which relates to the facilitation, development, establishment and maintenance of an efficient and effective risk management process in the organisation. Detailed here in the corporate governance section of this integrated annual report is the composition, proceedings and role of the risk committee. Based on assurances obtained and information reported, it is the board’s opinion that the systems and processes in place, as described above, have ensured effective risk management during the period under review.

Description of risk  Mitigating controls/actions 
CLIMATIC RISKS 
Extreme weather conditions and long-term changes in weather patterns  Geographic diversification
Product diversification
Portfolio of quality farms
Irrigation and dams
Asset insurance 
MARKET RISKS 
Volatility in agricultural markets, prolonged market weakness and exchange rate volatility  Skilled marketing partners
Market diversification
Balance of long- and short-term crops
Geographic diversification
Exchange rate cover 
OPERATIONAL RISKS 
Project delays and/or cost over-runs, termination of lease agreements, and input cost pressures – wages, electricity, fuel and fertiliser  Evaluation and implementation skills
Rigorous project analysis
Added-value partnerships
Tried and tested systems
Limit greenfield projects
Proactive engagement with lessors and other stakeholders
Aim to be the “partner of choice” in community joint ventures
Geographic and product diversification
Budgetary control systems
Environmental management 
RESOURCE RISKS 
Scarcity of quality land, interruption of electricity supply, disruption in water supply, shortage of skills, and labour unrest  Geographic diversification
Best practice environmental management
Standby generators at key sites
Efficient irrigation systems
Participation in irrigation management structures
Skills development programmes
Aim to be “employer of choice”
Maintain good labour relations 
REGULATORY RISKS 
Legislative and regulatory compliance, agricultural market controls, and legislative changes  Compliance monitoring through board committees
Engagement with legal and tax consultants
Market, product and geographic diversification
Proactive monitoring of planned changes 
FINANCIAL RISKS 
Fluctuations in exchange rates, and cash flow pressure Geographic and market diversification
Regular monitoring of funding requirements, resources and facilities
Adequate facilities to manage working capital requirements
Proactive engagement with funding providers 
REPUTATIONAL RISKS 
Negative incident with reputational consequence  Stakeholder management
Partnerships with local communities
Maintain culture of dignity and respect 
GEO-POLITICAL RISKS 
Land restitution claims, unstable political regimes and unlawful occupation of farms  Settlement of valid claims
Proactive monitoring of proposed legislative changes
Geographic diversification
Relationship management
Stakeholder engagement
Sound corporate governance
Corporate social investment initiatives