SACAA Annual Report 2022_23

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16. RISK MANAGEMENT The objective of SACAA’s Enterprise-Wide Risk Management programme is to reduce the total cost of risk, to maximise the available opportunities, and to add maximum sustainable value to all organisational activities by assisting in achieving key strategic objectives. Enterprise-wide risk management is embedded throughout the SACAA, as it ensures that the organisation fulfils its mandate, achieves its strategic objectives, and explores identified opportunities. This is achieved through the continuous reassessment of current risks and the identification of emerging risks and opportunities. All identified risks, whether strategic, tactical, or operational in nature, were assessed and updated in the risk registers. They were mitigated through the existing controls and implementation of recommended actions to ensure an acceptable level of control effectiveness. The risk appetite was determined directly in relation to SACAA’s strategy and considered in terms of strategy setting, resource allocation, and key management decisions and actions. To this end, Risk Management is a standing item on the Executive Management Committee and Audit and Risk Committee’s agendas. The Audit and Risk Committee reviews organisational risk on a quarterly basis. Two (2) major risks on the SACAA risk registers dominate the risk register. They are the following:

• The downgrade of South Africa by major International Grading Agencies (Moody’s, etc.) will result in an increase in the risks below. Fitch has now moved South Africa to stable, and this is a positive outlook for South Africa and the SACAA in relation to the risks identified below: • Strategic Risk – will lead to reduced civil aviation activity, putting a strain on revenue and forcing the SACAA to review / reduce strategic outcomes. • Operational Risk -- Reduced revenue will put pressure on operators to cut maintenance cost, compromising safety. -- Lack of revenue might prohibit the SACAA from fulfilling its safety and security oversight mandate. • Financial risk – lack of investment in South Africa will lead to reduced civil aviation activity, thereby negatively impacting on the revenue streams of the SACAA. • Legal risks – increase in litigation costs due to operators cutting corners to stay afloat. • South Africa was put on a “grey list” by the Financial Action Task Force (FATF) for falling short of certain international standards for the combating of money laundering and other serious financial crimes. The FATF is a global body that aims to tackle global money laundering and terrorist financing.

Governance I Annual Report 2022/23 I 129