Sasol Integrated Report 2022 - Book - Page 31
INTRODUCTION | ABOUT SASOL
CREATING VALUE
STRATEGIC OVERVIEW
DELIVERING
GOVERNANCE AND REWARDS
ADMINISTRATION
RISK MANAGEMENT
Managing our Group top risks
In pursuing our Purpose, and ambition to grow shared value while accelerating our transition, we proactively manage
risk to enable the achievement of business objectives.
Our risk management approach is inextricably linked to our corporate strategy and is an essential part of good corporate
governance as well as effective leadership. It is fundamental to how the company is managed at all levels and is embedded
into our key decision-making processes and day-to-day activities. Effective risk management is key to facilitating benefits
from opportunities.
Our Enterprise Risk Management process
Our Enterprise Risk Management (ERM) Framework directs our approach to identify, understand and respond to significant risks associated with our business.
In executing our ERM process, we follow a Plan, Do, Review and Improve (PDRI) model where we identify, understand, execute, monitor, govern, assure and
report on our top risks and respond to significant risks being faced in the short, medium and long term. In improving our ERM Framework, we have enhanced
our Risk Policy (the Policy) to ensure alignment with the direction of our business, our annual top priorities, Purpose and values.
The following 10 statements summarise the key message in our revised Risk Policy:
1
3
5
7
9
Our Purpose and strategic ambitions are core to everything
we do in Sasol.
We drive towards embedding risk management into key
decision-making processes and day-to-day activities.
We proactively manage risk in order to minimise downside
potential, and capitalise on upside potential.
We understand that the Policy also caters for management
of significant risks that have the potential for business
continuity impacts.
We clearly understand our accountabilities for risk
management in Sasol, with oversight and management
of risk roles articulated in the Policy.
2
4
6
8
10
Managing risk is fundamental to how the company is managed
at all levels.
We understand that risk management is a dynamic process
considering the ever-changing context within which we operate.
We promote a culture of risk awareness, where all significant
risks are assessed and managed in accordance with our
ERM Framework.
We obtain and provide adequate assurance on the efficacy
of the risk management process and key responses.
Managing our Group risk appetite
and tolerance
We understand the risks associated with our
business, and we manage them proactively and
effectively, within our risk appetite, in order to
optimise business returns.
Risk appetite
Extent and type of risk we are willing to take in order to
meet our strategic and capital deployment objectives.
Risk tolerance
Level of uncertainty we are prepared to accept.
It identifies the maximum boundary, beyond which
we are unwilling to operate.
We continue to operate within the Group’s
approved risk appetite and tolerance levels and
are still actively managing exposures related to
debt covenants and gearing, strengthening the
balance sheet.
PROCESS IN MANAGING GROUP
RISK APPETITE AND TOLERANCE
• Define risk appetite and tolerance
• Embed principles for managing risk
appetite and tolerance
• Monitor application of risk appetite
and tolerance
• Review risk appetite and tolerance metrics
Our risk appetite and tolerance metrics
• Net debt-to-EBITDA
• Gearing
Risk management is governed at different levels in the
company and we also communicate and report on relevant risks
to external stakeholders.
Another key enhancement to our ERM Framework was the inclusion of a Business Continuity Management Programme and Group Crisis process as an integral part
of the overall ERM Framework. To this effect, the Group Crisis Management Protocol and Group Crisis Communication Guideline documents, which direct and
govern how Sasol deals with a highly disruptive unexpected operability and reputation or liability issues have been updated and aligned with the current
operating model structure.
The responsibility for our ERM Framework and supporting processes resides with the Chief Risk Officer, who is responsible for enabling enterprise risk management
across the organisation, aligned with changes in our operating model and approved delegation of authority levels.
Review of risk metrics considers changes in:
• Internal business and operational environment
• External environment (eg economic and
geopolitical environment)
• Environmental, social and governance
requirements
• Strategic priorities (including material matters)
and portfolio
• Credible risk scenarios
• Competitive conditions
SASOL INTEGRATED REPORT 2022
30