DPE Shareholder Oversight & Risk Management

SOE Regulatory Environment

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The shareholder has specific powers and responsibilities in the SOE governance system

ShareholderExecutive Authority

BoardAccounting Authority

Management

Companies Act & PFMA establishes relationship

Management AgreementBoard cascades delegations and

performance expectations down to management

Shareholder ManagementDefines powers and responsibilities of shareholder viz a viz the Board and Management

Presidency Performance of Minister of

Public Enterprises

Parliament Transparency and

accountability

The Shareholder is primarily responsible for the appointment of the Board

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Shareholder Expectations and Governance Framework: Contents

• SOE stakeholder/accountability structure

• DPE Statutory mandate for SOE Oversight

• PFMA & National Treasury Regulations• Company Law

DPE GOVERNANCE

TOOLS

Quarterly reports and Annual Financial Statements

Significance and materiality Framework

Board appointments and remuneration

Corporate Plan

Strategic Intent Statement

Transaction guidelines and section 54 Approvals

Board performance evaluations and attendance

Shareholder compact

Investor BriefAnnual General Meetings

Strategic SOE oversight

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Strategic SOE Oversight Cont…

• DPE has developed additional performance monitoring and evaluation systems:

• Strategic intent statements: • primary communication tool of the State’s expectation of the SOE strategy • Contains the SOE’s strategic purpose, scope of business, core business

consultation thresholds or investment strategy;• DPE to consult with sector and policy department, NT and the National Planning

Commission to determine SOE strategy.

• Investor Briefs• Issued by Minister to SOE Boards quarterly advising them of performance trends

and highlighting the need for corrective action in the event of any deviation from the agreed key performance areas and indicators.

• Boards are expected to respond indicating measures to address highlighted concerns or mitigate emerging risks.

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Performance Monitoring & Evaluation

• DPE has an obligation to review the performance of SOE.

• DPE monitors SOE performance on a quarterly and annual basis.

• Corporate plan risk assessment done in reference to the mandate and strategic objectives of the SOE (assessment of what events or conditions have prevented or what uncertainties could prevent the SOE of meeting the set objectives)

• Quarterly & annual reports analysed to determine whether SOE performance is on track with the corporate plans, whether strategic objectives have been met and to highlight any emerging risks.

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DPE reviews SOE performance (Treasury Regulation 29.3)Isibuko DashboardMinister issues Investor Briefs to SOE Boards on emerging SOE performance trends, highlighting need for corrective action in event of any deviation from agreed key performance areas and indicators. SOE AGMs.SOE reporting to Parliament (PFMA Sec 65).

Performance Monitoring

& Evaluation

The shareholder management process integrates national strategic objectives into SOE planning and operations

DPE has developed a comprehensive risk management framework Risk management — the comprehensive process of identifying,

assessing and responding to risks — is not an end in itself. When undertaken effectively, it can deliver a range of benefits, by:

• improving planning processes by enabling the key focus to remain on core business and helping to ensure continuity of service delivery;

• reducing the likelihood of potentially costly ‘surprises’ and preparing for challenging and undesirable events and outcomes;

• improving efficiency and general performance;

• contributing to the development of a positive organisational culture, in which people and organisations understand their purpose, roles and direction; and

• improving accountability and governance — in relation to both decision-making and outcomes. This is particularly important for public sector entities, which exist to deliver outcomes for the benefit of the public.

Risk Management

Key questions to consider in undertaking this analysis include:• the type of risk – technological, financial, safety etc;• the source of risk – external (political, economic, natural

disasters) or internal (reputation, security, knowledge management, etc);

• what is at risk – area of impact and the type of exposure (people, reputation, operational results, assets etc); and

• the level of control – the degree to which the agency can influence, affect or manage the risk.

Risk Management

The risk management process consists of the following main steps:1. Objective setting (what is our mandate, objectives, etc)2. Risk identification (what can go wrong, what can prevent objectives

being achieved, causes of risk?)3. Risk analysis (what are the chances of the risk occurring

[LIKELIHOOD], what will be the effect when it occurs (IMPACT]). 4. Risk response (avoid, accept, reduce or share the risk by developing

controls, procedures, etc to reduce risk to acceptable levels).5. Control activities (policies and procedures are established and

implemented to ensure the risk responses are effectively carried out).

6. Information and communication (information is captured and communicated so that people are able to carry out their risk management duties).

7. Monitoring (ongoing management activities and separate evaluations).

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Risk Management

Isibuko business intelligence dashboard system has been implemented to allow for timely reporting by SOE and for SOE performance assessment by DPE.

• Risk assessed at 3 levels:• SOE • DPE• Portfolio

Risk Identification & Description

Risk Treatment & Assessment

Charts are used to determine the change in ratings over time

Risks can be clearly plotted and ranked

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The risk profile of the SOE portfolio seems to be improving

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Thank You