How we manage risk

People are our most important asset and are key to our ongoing success. There is a global shortage of clinical employees, especially nurses and radiographers. These shortages affect the Group's growth prospects, our ability to deliver quality care and services and, ultimately, our operations' sustainability.

The Group's strategic ambition places an additional demand on an already overstretched work force. Failure to attract and to retain sufficient skilled resources with the appropriate skillsets for these key roles could hamper performance and ultimately achievement of objectives.

The South African healthcare sector has experienced a general shortage of nurses, across all categories of nursing with increasing shortages in specialist registered nursing personnel. Internationally, Alliance Medical continues to be faced with a shortage of radiographers (particularly in Ireland) and aggressive competition for clinical resources from the NHS and private competitors in the UK.

Over the past year, the shortages were further impacted by COVID-19. Some contributing factors included:

• Increased infection rates in healthcare professionals, nursing personnel, radiographers and frontline employees causing illness or death or requiring employees to go into quarantine or isolation.
• Increased demand for clinical skills from other public and private sector providers.
• Increased demand for additional nursing personnel in South Africa to treat the influx of COVID-19 positive patients at facilities.

Healthcare professionals, nurses and frontline employees have had to face high volumes of severely ill COVID-19 patients and an unprecedented number of patient deaths from COVID-19 related illnesses and have therefore been subjected to tremendous physical, mental and emotional pressure.

As a responsible employer, we are required to provide a safe work environment for all our employees. At the same time, we need to provide care to our patients and fulfil all essential service provider responsibilities.

• Operating the Life College of Learning – a higher education institution offering one of the top three private nursing qualifications in South Africa.
• Developing and retaining scarce skills through continuing professional education (CPE), for example through our pharmacists' internship and pharmacists' assistant programmes.
• Ongoing review of senior management resources and succession plans in place for key positions.
• Enhanced employee value propositions, including employee share schemes, remuneration benchmarking and other benefits to attract and retain employees.
• Management and leadership development programmes in place.
• Clear career path for employees and continuous training and development programmes.
• Agency arrangements in place to provide agency employees if needed.
• Redeployment strategy in place for the utilisation of nursing employees from other units and regions in the event of shortages in South Africa.
• International nursing recruitment programme.
• Employee wellness programmes in place for all employees, including trauma debriefing and psychological support.
• Programmes promoting diversity and inclusion in place.
• Several infection prevention protocols remain in place and regular training provided to safeguard and protect employees from exposure to COVID-19.
• Designated COVID-19 compliance officers in place to oversee adherence to the standards of hygiene and health protocols related to COVID-19 at the workplace.
• Phased-in mandatory vaccination for a safer work environment.

• Through targeted succession planning, we ensure business continuity and that we can attract talented leaders.
• Enhancing the skills base will improve business performance.
• Engagement with the South African Nursing Council to increase student numbers.
• Enhancing employee wellness programmes to address mental health issues for healthcare workers.

• Delivering excellent quality and cost-effective care.
• Implementing an appropriate pricing strategy focusing on efficiencies and input costs.
• Focusing on safeguarding good relationships with healthcare funders and engaging with them on their issues and concerns.
• Providing a differentiated service offering.
• Focusing interventions with doctors to increase clinical outcome data and efficiency.
• Developing value-based clinical products in South Africa.
• Placing case managers at facilities in South Africa to manage claims submitted to funders.
• Managing long-term contracts with our international businesses and their national healthcare funds.

• Through increased engagement, targeted interventions and a differentiated service offering, we can position ourselves as the local and international service provider of choice.
• Developing clinical products that improve patient outcomes and drive market share growth.
• New business offerings such as community diagnostic centres in the UK.

Cyber-security risk continues to remain a key risk to our business globally and the threats are evolving, unpredictable and increasing in frequency. Criminal elements continued to exploit the rapid and widespread adoption of work-from-home tools due to COVID-19 to launch wide scale cyber-attacks. Healthcare data is valuable and cyber-criminal elements have relentlessly targeted healthcare organisations across the globe to the detriment of patient care.

Extra vigilance and cyber-crime awareness are required around data security profiles and the accessibility of data. The balance between securing data behind a firewall and making it readily accessible to employees and business partners must shift to support new ways of working while keeping existing business processes and operations moving.

• Appointed a Chief Information Security Officer (CISO).
• Dedicated IT security team in place.
• Continued mature information security management system (ISMS) implementation, internationally certified by the British Standards Institution (BSI) (ISO 27001:2003).
• Performed regular risk assessments, including annual internal and external security assessments.
• Implemented an information management strategy to improve security and manage residual risks, along with further measures to protect the Group's intellectual property from hacking and other illegal cyber-activities.
• Ongoing logical and physical IT security controls implementation, including advanced email protection, firewalls, end-point protection, cyber-security enhancements and personal information protection.
• Implemented proactive tools to detect and respond to cyber-threats.
• Regularly providing information security and cyber-awareness training for employees.
• Monitoring security events through our 24/7 security operations centre (SOC).
• Ensuring adherence with the requirements of the General Data Protection Regulation (GDPR).

• Investing in information security controls to enhance our existing security measures and safeguard our data to provide reassurance to our stakeholders.

We operate in the global healthcare market, and our operations are spread across different countries. The risk exists that country-specific factors, such as economic and political factors, or government policies, could adversely affect the Group.

While optimism is increasing in some countries with the vaccine roll-out programmes well underway, economies worldwide continue to be impacted by recurrences of COVID-19 waves. In South Africa higher unemployment and decreasing household income may impact on patients' ability to afford private healthcare cover. Deteriorating social conditions may result in further civil unrest.

• Diversified business model offering both inpatient and outpatient services across multiple territories.
• Annual strategy process in place with regular reviews of strategy and tracking against progress.
• Active monitoring of country-specific factors in the countries where we operate.
• Ongoing engagements with regulators and governments for long-term partnership solutions.
• Continued focus on business optimisation programmes.
• Focused on developing value-based clinical products.

• Building relationships based on trust by actively working with local governments, thereby positively impacting the healthcare markets in the countries where we operate.
• Providing patient centric care and improving access to care.
• Integrating in-person and virtual healthcare solutions.

COVID-19 has influenced how consumers view and consume healthcare. This has resulted in an altered case-mix of non-COVID medical admissions and reduced surgical admissions. Recovery to pre-COVID case-mix is unlikely.

Changing consumer behaviour has significantly ramped up the need for greater healthcare digitisation as consumers look for seamless, easily accessible and integrated physical and virtual care.

This changing landscape requires us to deliver patient care that is patient-centric.

An increasing competitor landscape and the growing vertical of health technology requires us to strategise accordingly to remain relevant and ensure sustainable growth.

• Annual strategy process in place with regular reviews of strategy and tracking against progress.
• Board approval of the strategy and performance oversight.
• Regular executive review of strategy and management of performance against strategy.
• Skilled and experienced executive and management team.
• Strategic project governance and management.
• Investment and acquisition governance and management.
• Business environment scanning.
• Product development governance in place with product development initiatives in progress.

• Proactively managing strategic and business risks enables confident business decisions, minimises financial loss and promotes competitive differentiation.
• Improved healthcare professionals' engagement allows us to deliver patient-centred, quality care to patients.

There is a general shortage of doctors in the South African market, and a shortage of radiologists in certain regions where Alliance Medical operates. These shortages affect the Group's growth prospects, our ability to deliver quality care and services and, ultimately, our operations' sustainability.

The general shortage of healthcare professionals was exacerbated by COVID-19 during the year.

• A transparent recruitment and retention strategy exists that includes:
  • providing bursaries and sponsorship programmes to medical specialists in South Africa, and facilitating continuous professional development training for them;
  • ongoing engagement with healthcare professionals;
  • doctor partnership model and support policy, with regional clinical managers appointed to enhance doctor relationships and implement quality improvement initiatives in South Africa; and
  • ensuring infrastructure and equipment at facilities are improved.
• Investment in various reward, development, recruitment and cultural initiatives to alleviate Alliance Medical's skills shortages.
• Alliance Medical International recruitment programme.
• Constituted a dedicated workstream and hospital-based committees to address the impact of COVID-19, focusing on doctor availability and recruitment.
• Instituted tele-reporting in our international business, sourcing additional reporting capacity from other third-party houses.

• Assisting to alleviate critical skills shortages through our interventions positions Life Healthcare as a business supporting our associated healthcare professionals.

• Proactively monitoring and, where possible, providing input for any new proposed legislation.
• Ensuring compliance through our quality standards.
• COVID-19 compliance officers in place in our southern Africa business, and the COVID-19 compliance forum remains active.
• Consulted with legal, and health and safety experts to ensure compliance with Disaster Management Act requirements.
• Privacy policy and standard operating procedures in place to guide our business.
• Compliance Risk Management Plans (CRMPs) in place for all material legislation.
• Instituted a bi-annual compliance attestation process across the Group.
• Compliance Champions operating model in place.
• Regular and ongoing training on GDPR and POPIA requirements.
• Processes are in place to ensure adherence to POPIA and GDPR requirements.

• Assisting the industry in developing appropriate solutions through continued engagement with regulators and relevant bodies.
• Enhancing and protecting our reputation through ongoing compliance with laws and regulations.
• Transparent engagement processes could potentially enhance our relationships with a variety of stakeholders, including regulatory bodies.

Infrastructure and equipment are key pillars supporting the delivery of high-quality healthcare and an excellent patient experience.

Effective processes for the regular maintenance and replacement of plant and equipment are necessary in ensuring delivery of safe, effective care, a safe work environment and continuity of services.

COVID-19 and the recent social unrest in South Africa have highlighted the risk of supply chain disruptions. Ensuring continuity of supply of critical stock, consumables and equipment is necessary to deliver quality patient care.

We are also impacted by a lack of reliable electricity supply in the southern Africa business and certain geographies are also impacted by water shortages, driven by climate change.

In our International business, regular and effective maintenance of cyclotrons is critical and skilled resources are required to operate these.

• Regular maintenance and upkeep of equipment.
• Regular maintenance and servicing on equipment is carried out in line with OEM specifications.
• On-site facility and engineering teams.
• Fire detection and fire-fighting equipment on-site.
• Emergency and disaster planning in place.
• Internal fire assessments, compliance assessments and risk assessments are carried out at all facilities.
• External assessments of fire equipment, buildings and general equipment.
• Emergency back-up generators at facilities for electricity.
• Back-up borehole water supply at certain facilities.
• Insurance is in place for the replacement of plant and equipment.
• Contingency and business continuity plans.

• Managing operational risk results in better, effective and sustainable operations.
• Enhanced patient experience and quality care.
• Reduction in losses from damage and business disruption.

The quality of healthcare services provided by the Group and healthcare professionals and our patients' safety is of utmost importance to us. Failure to consistently deliver safe, high-quality care to our patients is a risk.

COVID-19 has resulted in excessive demand during infection peaks which together with employee shortages and capacity constraints could negatively impact on the quality of care at facilities.

We are exposed to the risk of clinical employees and medical professionals not following appropriate treatment protocols or professional guidelines resulting in inadequate patient care.

With the highly contagious nature of COVID-19 there is the potential risk of a large-scale outbreak at one or multiple of our facilities. No outbreaks at our facilities were evident over the financial year.

• Implemented a quality management system (QMS) to ensure we provide quality healthcare, and established quality control procedures.
• Acquired QMS certification, and we are ISO 9001 and ISO 13485 accredited through BSI.
• Monitoring clinical performance indicators.
• Quarterly national quality review meetings are held.
• Regular internal quality assessments are carried out at each hospital by the quality systems support specialist (QSSS).
• Medical malpractice and professional indemnity insurance in place.
• Ongoing training of employees on quality procedures.
• Established a dedicated doctor work stream, and constituted doctor COVID-19 committees and ethics sub-committees at hospitals to ensure correct clinical protocols are followed and ensure an adequate doctor supply.
• Addressed COVID-19 related resource shortages by leveraging agency employees to meet increased demand or to stand in for infected employees, redeploying existing employees from other wards and postponing or cancelling leave.
• Increased capacity through the sourcing of additional ventilators and other equipment required for treatment.
• Conducted independent verification reviews at facilities to review COVID-19 treatment readiness plans and ensure alignment with Group protocols.
• Instituted the standard practice of temporary capacity diverts (TCDs) at facilities to ensure the best possible treatment options for patients based on their acuity level.
• Implemented various measures and guidelines to curb the spread of COVID-19 at our facilities, including infection prevention protocols, screening protocols, and guidelines for using personal protective equipment.

• Enhancing the patient experience and protecting our reputation through an ongoing focus on quality and safety.
• Improving patient care and safety according to industry best practice through continuous, robust engagements with health authorities and specialists.
• Delivering clinical excellence through a smaller, more efficient, better trained and educated nurse workforce.
• Developing clinical products that improve patient outcomes and deliver patient centric care.

Information and information exchange are crucial to the delivery of quality care at all levels of the healthcare delivery system - the patient, clinicians and other healthcare service providers, funders and regulators. There is a drive towards electronic health records and digitisation as healthcare becomes more patient centric. Therefore, our IT infrastructure and systems must be appropriate and fit-for-purpose to respond to this cultural shift.

There is also a risk of failure to maintain reliable information systems for business operations in the event of an IT disaster like a data breach.

We are exposed to implementation risk regarding information management projects underway to improve existing infrastructure and ensure better Group-wide integration.

• Regular assessments of our IT infrastructure are conducted, and action plans to effect enhancements and address shortcomings are implemented.
• Ensure all software and/or hardware are upgraded/replaced before their end of life (EOL) term.
• Annually perform disaster recovery tests, with action plans documented and implemented to address any identified shortcomings.
• Following rigorous project management methodology, with strong business sponsor leadership and oversight.
• A formal systems development lifecycle (SDLC) process in place and a total cost of ownership (TCO) costing model is applied to each project.
• Project risk registers in place, with a response plan in place for identified risks.

• Offer better and more efficient services to our patients by investing in our IT infrastructure, thereby lowering the cost of care while maintaining quality.
• Appropriate and effective IT infrastructure and systems in place to support growth initiatives and performance expectations, allowing us the opportunity to be more competitive.

The Group's reputation and relationships with key stakeholders could be affected by adverse events that occur while employees or other healthcare professionals perform clinical procedures or other related activities. Furthermore, events outside of our control can adversely affect our brand.

• Proactive complaints management system in place.
• Implementing quality management processes across the business, with ISO 9001 certification held.
• Dedicated media strategy in place for dealing with complaints raised through the media and other media-related issues.

• Enhancing and protecting our reputation through an ongoing focus on quality and a clear communication strategy.