We manage our risks to support the achievement of our strategic objectives by identifying opportunities to protect, create and capture value. Our risk management arrangements align with the principles of King IV, ISO 31000:2018 and generally accepted good practice in a manner that is fit-for-purpose. Ultimate accountability for the adequacy of the risk management programme across Tiger Brands rests with the board. The board has assigned oversight responsibilities for risk governance and the development of appropriate organisational and cultural maturity to the audit and risk committee.
The group executive committee, supported by business unit-level executive committees, is tasked with the design, implementation and operation of the risk management system. Business unit-level management teams, supported by group functions, continuously monitor and manage their risk profiles, and are responsible for developing and maintaining an appropriate risk-aware culture.
Risk profiling and oversight
We adopt a comprehensive approach to identifying risks that includes a top down, as well as bottom-up analysis. The top-down approach starts with a group view of Tiger Brands, where consideration is given to the operating environment, the business model and the associated objectives and strategies defined by the group. Similarly, business unit leadership is required to analyse their operating environments, business models, products and strategies to identify category-specific risks; these are also reported at the group level for oversight. Common business unit-level risks are then identified, which may be escalated and managed at the group level as needed.
In addition to identifying risks that impact our ability to achieve our organisational objectives, management also considers factors that may develop into risks, even in those instances where our understanding of these factors is not sufficient to develop comprehensive mitigating strategies. These are termed "emerging risks" and are also tracked through the various oversight structures following a top down and bottom-up identification process.
We believe that effective risk management practices generate additional benefits beyond the value protection outcomes typically associated with risk remediation activities. As part of its risk analysis process, management identifies and reviews opportunities to create or enhance a competitive advantage, and/or increase our reputation, with a view to optimising value creation.
The group executive committee oversees the identification of group risks and responses. Business unit management oversees and manages category and business-specific risks and reports the material risks to the group executive committee through the operational audit and risk management committee. A consolidated Tiger Brands risk profile is then compiled and reported to the audit and risk committee before being submitted to the board. In addition to the analysis and remediation of top risks, we maintain a combined assurance programme that aims to provide stakeholders with comfort that the control measures deployed to shape risks are adequate and effective. Climate change has been specifically identified as a significant emerging risk and is evaluated and managed over the short term (less than 12 months), medium term (one to three years) and long term (beyond three years).
Risk appetite and tolerance
General risk appetite and tolerance ranges are defined by group executive management and annually approved by the board. These ranges are reflected in the heat maps and provide general guidance regarding expected responses to the mapped risks.
For each risk, group executive management determines a targeted residual risk level that represents risk-specific appetite levels. This target and the associated control improvement plan is subject to management and non-executive director oversight in accordance with Tiger Brands’ risk management policy.
While the group will accept risk to achieve its ambitions of being a market-leading, international, diversified FMCG company, Tiger Brands has an aversion to risk in the areas of food safety, the delivery of quality products and loss of life.
Our material risks are those that exceed our residual risk tolerance level and are thus identified as having the most material implications for Tiger Brands and its stakeholders.
The inherent risk heat map presented below represents the inherent risk profile of our material risks. Without adequate remediation, the risks are potentially a threat to the group as a going concern and thus merit management’s attention. Following management’s intervention through various remediation programmes the material risk profile shows a marked improvement, albeit still in need of further remediation. This is outlined below in our residual risk heat map.
Inherent (with risk score)
Residual (with risk score)
The following table reviews the implications, mitigation measures and year-on-year trend in the risk rating for each of our top risks.
| Material risks | Context and value impact | Mitigating actions | |||
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1.1 Security of supply Failing to adequately manage risks associated with outsourced manufacturing and in-bound supply. Risk trend: stable |
Tiger Brands collaborates with various supply chain partners to deliver on its strategies. These suppliers provide raw materials, ingredients and packaging, and in some instances finished goods, that are subject to quality control processes outside of our protocols. Failure to ensure adherence to Tiger Brands’ specifications and standards may erode consumer satisfaction, profitability and brand equity. Currently, 75% of our supply for our top 1 000 line items is single source supply, presenting risks should these suppliers be unable to meet our requirements in terms of volume and/or quality. We experienced several shortages this year impacting some of our largest SKUs. |
Our mitigation programme is centred around the following key activities:
STRATEGIC RESPONSE |
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1.2 Sustainability of agricultural supply Climate-related impacts are increasingly affecting our supply chain, putting at risk the security of ongoing production of food. Risk trend: stable 2024 |
Our global and local supply chain is increasingly affected by climatic conditions that impact not only the location, availability, accessibility, and price of our raw materials, but also downstream factors such as logistics and regional legal requirements. In recent years, either the quality or quantity of supply of the following agricultural products has been affected by weather patterns:
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Our mitigation response targets the following:
STRATEGIC RESPONSE |
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1.3 Geopolitical instability Social and political factors on the continent continue to remain unpredictable with recent developments potentially creating further disruption. Risk trend: stable |
The dynamic socio-political and economic context in our Rest of Africa markets creates significant uncertainty. Recent challenges include a lack of forex availability impacting our collection of debt and sell out rate, political instability, policy uncertainty and potential social unrest associated with elections and political leadership changes. Countering this risk is the unparalleled opportunity for growth and investment across Southern Africa. |
Our mitigation response includes the following:
We continue to effectively manage our debtors ageing and credit limits, aided by our key distributor model. STRATEGIC RESPONSE |
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2.1 Food safety Harm to the consumer caused either by food-borne illnesses relevant to our food products, or undesired skin/body reactions relevant to our personal and home care products. Risk trend: down |
Food products have inherent potential to lead to health concerns for consumers and thus remain at the forefront of management’s attention given our strong risk averse stance on issues relating to public health and safety. There is empirical evidence globally of the increase in salmonella and aflatoxin. |
The nature of food safety demands that we approach it in a scientific and systematic manner, we have implemented the following:
Limiting the use of third-party manufacturers provides us with better management of quality and food safety. STRATEGIC RESPONSE |
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2.2 Deteriorating infrastructure Insufficient availability, or inadequate quality of supplied electricity, water and other services. Risk trend: stable |
South Africa’s water, electricity and transport (road, rail and port) infrastructure is increasingly under pressure. Insecurity of water and electricity supply negatively impacts our production capability and costs; all our manufacturing facilities are reliant on the availability of water especially the Beverages business. Poor transport infrastructure has a significant cost impact across our value chain. |
Our mitigation programme is centred around the following activities:
STRATEGIC RESPONSE |
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2.3 Cyber security threats Risk of financial loss, disruption or damage to Tiger Brands’ reputation due to failures of its information technology systems following large-scale cyber security attacks. Risk trend: stable |
The increasing interconnectivity, globalisation and commercialisation of cyber crime is driving greater frequency and severity of cyber incidents, including data breaches. This can compromise the confidentiality, integrity and availability of information and technology resources, lead to disclosure of commercially sensitive information and intellectual property and disrupt our operations. In addition to non-compliance risks, the release of personal information has negative reputational and brand implications. |
We are mitigating this risk through various initiatives:
STRATEGIC RESPONSE |
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2.4 Changing consumer preferences Failure to understand and respond effectively to changing consumer demographics and spend, as well as consumption behaviour and patterns. Risk trend: stable2024 Ranking (Joint 2) |
The persistent challenging economic environment has significantly impacted consumer and shopper behaviours. Disposable income remains highly challenged across income groups and ages; this has been exacerbated by high levels of household debt and the lingering effects of slow economic growth. Despite recent easing of inflation, consumers remain under pressure. |
Our mitigation programme includes the following activities:
STRATEGIC RESPONSE |
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2.5 Macro-economic outlook (impact on premium brands) Possible increased pressure on premium brands as consumers trade down due to reduced disposable income. Risk trend: stable |
Consumers continue to switch brands or products due to declining disposable income and show less brand loyalty. Shifts in consumer behaviour due to increasing demands on disposable income have resulted in many consumers trading down due to food price inflation, utilities inflation and interest rate hikes. This risk rating thus remains as is for the current assessment. |
Our strategy and execution plans are focused on driving affordability and democratising health and nutrition within our brand framework of 16 focus brands, coupled with a renewed brand investment model. This will see renewed focus on value engineering in our power brands such as KOO, Tastic, Oros, Fatti’s & Monis and All Gold. STRATEGIC RESPONSE |
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2.6 Quality of data and integrated systems Inaccurate data compromises our ability to fully harness the capabilities of data analytics and AI. Risk trend: stable |
Accurate data and quality information enables us to unlock immense value through our existing data sets and provides us with added competitive advantage as we advance our capabilities in data analytics and AI. |
STRATEGIC RESPONSE |
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2.7 Pace of technology integration Failure to fully realise the benefits of digital transformation would compromise our competitive differentiation. Risk trend: stable |
Delivering digital transformation in a timely manner is essential to remaining competitive and to ensuring deeper market penetration of our products. Leveraging technology platforms and automation enables us to transform how we do business and interact with stakeholders. |
We are executing our digitisation strategy, which aims to build competitive capabilities to improve productivity, efficiency and drive growth. This will allow us to respond faster to changing consumer demands, increase efficiency, drive sales and improve profitability. STRATEGIC RESPONSE |
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2.8 Evolving trade environment Responsiveness to a rapidly evolving trade environment with a blurring of channels and increased trade concentration. Risk trend: down |
Meeting and exceeding customer and consumer needs and wants are the lifeblood of our business. There is growing strength of retailers across modern trade and the wholesale market, placing greater demands on suppliers. With depressed levels of consumer spending and strong competitive pressure, this challenge remains material and threatens our market share, brand strength, profitability and penetration. |
Our mitigation actions include:
STRATEGIC RESPONSE |
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2.9 Political uncertainty Potential for policy changes should there be changes in South Africa’s governing leadership structure. Risk trend: stable |
There could be delayed implementation and/or changes in government policies and in key infrastructure reform required to stimulate the necessary economic growth. |
Our mitigation response includes the following:
STRATEGIC RESPONSE |
We have included the following emerging risks for the committee to consider when reviewing the current strategic risk profile of the group:
The table below provides a generalised overview of the principal sustainability-related impacts, risks and opportunities associated with our business activities.
| Sustainability-related impacts | |||
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Social inequality and inclusion |
As one of the largest FMCG companies in South Africa, we have a substantial role in shaping employment, enterprise development and skills development opportunities, as well as upholding and promoting human rights, entrenching fair labour and remuneration practices, balancing income distribution and providing access to affordable quality food products. |
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Public health and nutrition |
We manufacture and market processed food products that have direct implications for public health, including food staples and fortified foods that contribute to household nutrition and some snacks and treats with nutrition profiles correlated to obesity, NCDs and malnutrition. The availability and messaging of our brands can influence consumer perceptions on food choices and nutrition. Strict compliance with food safety and quality across our value chain is critical to ensure provision of nutritious and uncontaminated products. |
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Workplace health and safety |
People working in our manufacturing plants and warehouses and drivers of our delivery trucks are exposed to various occupational health and safety risks. Key safety risks include working at height, dangerous machinery, moving vehicles and unsafe conditions from heavy loads or objects. Key occupational health impacts include possible exposure to dust and heat, lifting heavy loads and ergonomic impacts of computer use. |
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Resource use and impact |
Water scarcity and energy security are acute issues. We use energy and water in our operations and the efficiency of our use of these resources directly impacts the general availability of these resources for communities and ecosystems (water). Our use of borehole water potentially impacts groundwater quality and availability. |
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Climate change |
As reflected in our group material risks, GHG emissions from our direct operations and manufacturing plants, purchased electricity, upstream manufacturing and agriculture (land conversion) and manufacturing, and downstream transport contribute to climate change. Organic waste that we send to landfill contributes to climate change through the release of methane. |
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Water pollution |
Effluent released from our manufacturing plants can alter the quality of water in waterways and water bodies and increase costs associated with public water treatment. |
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Waste and packaging |
Our production, disposal and processing of waste and packaging contributes to climate change and local environmental pollution. |
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Food waste and loss |
We incur food waste and loss at various stages of our value chain. Inefficiencies in harvesting, manufacturing mishaps, poor storage and transportation and issues at the retail and consumer level contribute to this waste. |
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Supply chain: social impacts |
Our sourcing activities and supply chain, encompassing agriculture, food processing and manufacturing operations, generate both positive and negative social impacts. These impacts relate to human rights, fair labour practices, social inequality and inclusion. Particularly at the local level, we exert some influence in upholding socially ethical practices. |
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Supply chain: environmental impacts |
Our sourcing and supply chain activities have both positive and negative environmental impacts, including on water quality and availability, biodiversity and land conversion, climate change, waste production and pollution. At the local level, we exert some influence in upholding environmentally responsible practices in collaboration with our suppliers. |
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| Sustainability-related risks | |||
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Socio-economic instability |
High unemployment, poverty and social unrest present risks to operations, potentially disrupting supply chains and market stability. |
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| Supply chain disruptions |
Extreme weather events and climate change, aggravated by local water scarcity and energy instability, could lead to disruptions in the supply of commodities and distribution of products. |
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| Regulatory and legal risks |
New legislative requirements, including new taxes and stricter regulation on environment and health, present legal and compliance risks. |
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| Reputational risk |
Failure to address economic transformation, public health, food security and climate change issues could damage our reputation and market share. |
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| Sustainability-related opportunities | |||
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Social redress and economic transformation |
By prioritising fair and inclusive employment practices, ensuring socially ethical sourcing and building equitable supply chains and business models, we can build and grow a more resilient business while contributing to economic transformation and social justice. |
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Public health and nutrition |
We can transition our product portfolio to healthier foods by reformulating products, raising awareness and educating consumers on health and nutrition. We can collaborate with government and other stakeholders on nutrition, to address systemic challenges. |
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Resource efficiency |
By implementing water-efficient processes, energy-saving technologies and renewable energy sources, we can help mitigate resource scarcity and lower costs. |
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Sustainable and resilient supply chains |
By developing more local, diversified, sustainable and resilient supply chains, we can support local economies, reduce vulnerability to climate-induced disruptions and strengthen partnerships with suppliers to address social and environmental impacts and risks. |
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Waste reduction and circular economy initiatives |
Reducing packaging waste and food waste and developing innovative new process and packaging solutions offers the potential to reduce costs and to develop new income streams that reduce resource consumption and environmental impact and that support enterprise development initiatives that address social inequality and economic exclusion. |
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