RAND WATER ANNUAL REPORT 2023

Operational Risk Rand Water has moderate appetite for taking risk impacting operational sustainability. Rand Water strives to maintain a reliable and efficient water service while exploring new technologies and processes to enhance operational effectiveness and adaptability to strike a balance between operational excellence and the ability to respond to evolving customer needs. Health and Safety Risk Rand Water has a moderate risk appetite for taking risk impacting security, health, and safety of all Rand Water stakeholders. Rand Water is expecting minor injuries, illness, and employee absences for up to 14 days as part of delivering on its mandate and performance targets. These parameters are clearly defined in the Board approved risk materiality framework and health and safety targets. Environmental Risk Rand Water has medium appetite for taking risk impacting the environment. Rand Water prioritises sustainable practices and environmental stewardship in operations and investments, and we are committed to promoting the responsible use of water resources whilst continuously minimising our environmental impact footprint. However, Rand Water is expecting that there may be some negative impacts on the environment, that some complaints may be lodged, and that some performance targets will not be met because of external service delivery challenges, but that these issues would be addressed in the short to medium term. The tolerance levels/ parameters are clearly defined in the Board approved risk materiality framework and Rand Water has a moderate appetite for taking risk impacting brand and reputation. Rand Water anticipates some negative media coverage, as well as stakeholder complaints/ activism, in carrying out its mandate and performance targets. The tolerance levels/ parameters are clearly defined in the Board approved risk materiality framework and environmental targets. environmental targets. Reputational Risk

Legal and Regulatory Risk Rand Water has no risk appetite for non-compliance with legal and regulatory compliance. Rand Water is committed to complying with all applicable laws, regulations, and industry standards, in delivering on its mandate and performance targets. Although Rand Water maintains effective governance and internal control systems to ensure compliance and treat regulatory risks, there remains a likelihood that investigations into potential non-compliances may happen but with outcomes unlikely to result in adverse actions/ responses. The tolerance levels/ parameters are clearly defined in the Board approved risk materiality Rand Water has moderate appetite for taking risk impacting communities. We consider the social impact of our activities and seek to engage with local communities to foster positive relationships and protect heritage. However, it is expected that in striking the balance to build and maintain infrastructure whilst delivering excellent service, the possibility of medium-term social impact on the population may occur. Top 10 Strategic Corporate Risks In the year under review, a total of 16 Strategic Risks and 5 Emerging Risks were identified through the Annual Strategic Risk Review exercise. These risks were approved by the Board and the Risk Owners provided quarterly updates of their risk mitigation strategies to the Top Management Committee (TMC), EXCO, GARC and the Board. Despite the complexities surrounding these risks, notable effort was made to manage the risks during the Financial Year. The top 10 Strategic Risks are depicted below with a brief description of the risk. These risks were ranked according to their residual risk ranking. framework and environmental targets. Social and Community Risk

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