Namib Poultry

The IDC – long considered a partner in local and regional development – funded this project, the first commercial integrated poultry business in Namibia.

Corporate governance


The risk assessment process results in the formation of a Risk Universe and Risk Register for the Corporation which details the material strategic or macro risks to which it is exposed.

Risk appetite and risk tolerance process

The defining and articulation of an effective risk appetite is considered one of the key building blocks to establishing a sound risk management framework. Risk appetite is defined as the amount and type of risk that an organisation is willing to pursue or retain. Key to the implementation of a successful risk framework is the determination/quantification of an organisation’s risk appetite and risk tolerance on an enterprise basis. Defining the level of risk the IDC is comfortable with assists it to make better informed business decisions, focus on those risks that exceed the defined appetite for risk, develop a business culture with a high awareness of risk and strike a balance between daring and prudence.

The setting of risk appetite and tolerance levels supports operational decision-making and strategic planning and provides IDC’s Exco with the necessary information to determine whether the risk profiles of current and potential activities are either financially acceptable or require additional risk enhancement measures to reduce the volatility to within acceptable risk appetite limits. The IDC’s risk appetite is linked and aligned to its mandate and business objectives and is an agreement between its business goals and the related risks. Risk tolerance is considered an integral part of the process and reflects an organisation’s readiness to bear the risk after risk mitigation, in the pursuit of its strategic objectives.

The IDC’s Risk Appetite and Tolerance Process incorporate the five steps set out below. Through the application of these, the Risk Appetite and Risk Tolerance Process will:

  • Establish Key Risk Indicators (KRI) per risk
    One or more KRIs are established for each of the risks identified in step 2 of the risk assessment process. The KRI’s can either be financial or non-financial, qualitative or quantitative. A KRI is related to a specific risk and is an indicator that provides an effective monitoring tool to measure changes in risk levels whilst keeping management appraised of shifts in established patterns;
  • Establish Risk Appetite thresholds per KRI
    For each risk, risk appetite thresholds are determined based on three levels, namely, appetite for the risk, tolerance for the risk or avoidance of the risk. Risk appetite, at the IDC, is defined as the amount of risk exposure, or potential adverse impact from an event that the IDC is willing to accept/retain. Once a risk threshold has been breached or KRI indicates that breach is imminent, risk controls are considered and/or implemented to bring the particular exposure level back to within an acceptable range;
  • Review the results with the risk owners
    Once KRI and risk appetite/tolerance levels have been set per risk, a review of the combined results is undertaken with each of the risk owners. The actual result for each of the risks is calculated and compared to the risk appetite thresholds. During this process each individual risk is assessed;
  • Compare risk measurement outcomes to the annual risk assessment
    The next step is to assess how the risk appetite outcomes compare to the risk profile established through the annual risk assessment. This assessment is achieved through a gap analysis and focuses on what is considered to be the most important risks; and
  • Summarise key findings
    Thereafter, an analysis and comparison of the risk appetite thresholds with the actual results are undertaken to identify the key risks facing the IDC.

Risk universe

The ERM process focuses on the main strategic risks that IDC is exposed to. The material risks facing the Corporation emanated from the risk assessment cycle 2013 from which the IDC’s Risk Universe and Risk Register are compiled. The top 11 key risks, depicted below, that emanate from the IDC’s risk universe and their materiality are reassessed and reviewed on a continuous basis. Within this recurring ERM process and additionally via the Board Strategic and Planning process, new and/or emerging risks are identified and assessed. Material/significant risk issues and/or risk threshold breaches are escalated to respective Board committees, which is a key feature of the risk management and reporting process across the Corporation.

Risk appetite threshold levels and current position
Risk Appetite Thresholds
Risk name Appetite Tolerance Avoidance Position as at
31 March 2013
Income dependence Percentage income received from a specific product <30% 30% – 50% >50% 46%
Equity price Percentage change in the value of IDC’s listed share portfolio >Risk free rate + 3.6% Between risk free rate and risk free rate + 3.6% < Risk free rate +2%
Due diligence Percentage of contracts impaired within 24 months of first draw measured on an annual basis <10% 10% – 20% >20% 29%
sefa Financial performance (cost to income ratio)  >100% 100% – 128% >129% 130%
Macro-economic Percentage volatility in prime interest rate during fiscal year <100 basis points 100 to 200 basis points >200 basis points 50 basis points reduction
Reputation Reputation tracking study for all stakeholders in the Financial Services Industry measured globally >70% positive tone 53% – 70% positive tone <53% positive tone 73% positive tone
Collectability Impairments as a percentage of total book outstanding (at cost)  <15% 15% – 20% >20% 18.2%
Pricing Portion of prime based loan book priced (value) below hurdle rate <20% 20% – 30% >30% 29%
Customer satisfaction Service measurement surveys based on a score out of 10 > 8 out of 10 5, 6 or 7 out of 10 < 5 out of 10 8.6 out of 10
Concentration Percentage exposure (at fair value) to a specific sector <25% of Capital Base 25% – 30% > 30% of Capital Base Other mining 48.8%
Sector Percentage of portfolio (at cost) with Workout and Restructuring Department <10% 10% – 15% >15% 18.3%

Risk management plan

  • Risk Management is a continuously evolving process. This means that the Corporation will continually strive to move from its current level of risk maturity to a more mature level of risk. This maturity can include improvements in risk governance, risk identification, risk assessment, risk monitoring and risk optimisation. As required, a Risk Management Plan detailing proposed activities and improvements to IDC’s ERM activities is prepared on an annual basis.

Risk management policy statement

  • Entails a brief statement about the Corporation’s commitment to risk management and is informed by the Corporation’s risk profile, appetite for loss, loss tolerance levels, and sustainability management, among others. The Risk Management Policy is reviewed annually to reflect the current stance on risk management with the intention of evolving from its current level of risk maturity to a more mature level of risk.

Risk management department

  • The Risk Management Department proactively promotes risk awareness, while monitoring and overseeing the management of key risks facing the Corporation on the basis of the ERM Framework. RMD is an independent cost centre established in line with best practice. RMD provides credit, operational and enterprise risk management analysis/products/services to its various stakeholders including IDC’s Board and Board Risk and Sustainability and other Board committees, Executive Management, IDC’s Internal and External Auditors, SBUs, departments and other stakeholders.

RMD’s primary objectives are:

  • To support the receipt of appropriate financial and development returns while maintaining an acceptable risk profile;
  • To support the application of best practice principles in order to analyse and manage risks, so as to ensure the strongest protection for the Corporation’s assets, its financial results, and consequently its capital;
  • Promoting a culture of increased risk awareness throughout the Corporation utilising/applying ERM activities and techniques; and
  • To establish, review and implement various risk management policies, systems, and/or frameworks.

The key roles and responsibilities of RMD include:

  • Playing a catalytic role in instituting and promoting a sustainable and robust ERM process;
  • Co-ordinating the ERM programme throughout the Corporation, including the annual review and assessment of the IDC’s risk profile;
  • Inculcate a culture of risk awareness throughout/within the Corporation;
  • Developing corporate-wide monitoring, assurance and reporting processes for risk management;
  • Regularly reporting to the Chief Risk Officer, IDC Executive Management, the Board Risk and Sustainability Committee and the IDC Board on critical risk areas identified, on progress with regard to the mitigation of these risks, and on any fundamental breaches of approved risk management policy guidelines;
  • Assist in refining the IDC’s risk appetite and aligning it to the IDC’s mandate as well as to corporate and operational targets, whilst ensuring the translation of such a risk appetite into appropriate systems of control;
  • Creating awareness of the long-term effects of investment decisions, identifying concentration risks and to set investment, exposure and risk concentration limits;
  • Advising SBUs and support departments within the IDC on risk management matters, including mitigating controls, processes and procedures;
  • Providing independent investment analysis for all investment proposals on a formal and informal basis;
  • Providing independent analysis and review of certain policies and procedures on a formal and informal basis;
  • Developing and reviewing pricing policies and methodologies and measuring the impact of these on the Corporation;
  • Measuring and assessing the investment portfolio in collaboration with certain support departments and SBUs;
  • Providing support, training and risk identification assistance to development finance institutions with whom the IDC has entered into co-operation agreements; and
  • Benchmarking of best practice risk management activities and application thereof where appropriate.

Executive management

  • Responsibility for the management of the IDC's risks rests with Exco. The CEO sets the “tone at the top”. Divisional Executives (DEs) in turn assign responsibility to SBUs and departmental heads.

Internal audit

  • Internal Audit assists in the review of control systems and risk management processes. In addition, Internal Audit performs an effectiveness review of management’s risk assessments and the organisation’s internal controls while providing guidance around the design and improvement of control systems and risk mitigation strategies. Furthermore, Internal Audit plays a critical role in providing the Board and Exco with an objective and comprehensive view of the internal control environment of the business.

Board Risk and Sustainability Committee

  • In terms of the IDC Board Charter, the BR&SC is responsible for assessing and prioritising risk. A summary of the Committee’s responsibilities are provided in the governance section here.

Coega Dairy Holdings

The IDC has identified increased competition in the dairy value chain and import substitution in the cheese industry as key sector development goals. We also singled out the need for increased farmer (and specifically B-BBEE) participation in dairy value-adding initiatives.

Windtown Lagoon Resort 

The newly built Windtown Lagoon Resort and Spa reflects the IDC’s focus to funding community-based projects that have potential to create employment opportunities in far-flung regions.

R13.1 billion
R16.0 billion
18 922
3 950
© The IDC 2013. All rights not expressly allowed are reserved. P.O. Box 784055, Sandton, 2146, South Africa