SBN HOLDINGS LIMITED Annual Report 2022

10 10 OUR VALUE CREATION STORY SBN HOLDINGS LIMITED Annual report 2022 11 Our top enterprise risks continued 3 Psychological effects of Covid-19 Employees, customers, third parties and other partners experience widespread post-pandemic stress that results in low productivity, misconduct, debt defaults and business closures. Transform client experience Impact ■Mental and physical health distress and fear of large gatherings or return to work ■Inability to perform work duties and related impact on employees taking up the slack ■Portfolio impact due to financial stress. Neutral Treatment ■ Employee wellbeing initiatives ■ Update recovery and resolution plans and embed in business continuity measures ■Credit portfolio management. 6 Ability to manage large scale changes Strategic priority Trend effect Introducing new change initiatives before the completion, closure or realisation of benefits from previous change initiatives results in resistance to change, strained resources and poor delivery. Transform client experience | Execute with excellence Impact ■ Overwhelmed employees contribute to poor service delivery and inflated costs ■ Non-delivery of strategic initiatives results in opportunity losses and failure to achieve strategic objectives. Treatment Neutral ■Lessons learnt support future development ■Monitoring of external environment to ensure continued relevance of changes. Operational dependence on third parties A number of third-party partners enable critical services to our customers which may result in the loss of internal process intellectual property or know-how. If the third-party is disrupted, the group might not have adequate internal skills or capacity to continue operating these critical services. Execute with excellence Impact ■Limited internal capacity may cause lengthy disruption of payment or platform services ■ Unauthorised access and Increasing Treatment use of data may compromise the integrity of the group's data ■ Partners could leverage their position to exert undue influence during performance disputes. ■Identify risk exposures and establish third-party management framework ■Cross-skill employees as subject matter experts ■Increase due diligence processes ■ Perform regular 11 Strategic priority Trend effect Regulatory constraints related to digital transformation Financial services innovation outpaces updates to regulatory frameworks, including that of suitable regulations for platform environments. Legacy regulations in some jurisdictions impede progress and allow unregulated competitors to progress faster. Execute with excellence Impact Increasing ■ Unsuitable/legacy regulations stifle innovation Regulatory processes can impede implementation of innovative solutions ■ Non-regulated competitors and new entrants in some jurisdictions create competitive arbitrage. business continuity exercises and disaster recovery testing. 12 Treatment ■ In-country engagement with regulators to share strategy and regulatory implications Participate in regulatory initiatives. 4 Technology instability Recurring unavailability of digital services erodes customer trust in the 'always on' promise that is core to the platform organisation value proposition. Execute with excellence Impact ■Frustrated clients switch over to competitors Temporary loss of transaction volumes and revenue ■Reputation damage and reduced customer trust in our ability to operate a platform. 5 Neutral Treatment ■Incident management and analysis ■IT landscape simplification and resilience programme ■ Enhanced scenario analysis and system testing ■Improved business resilience capability. Fraud via digital channels Clients are defrauded by external parties on the digital channel we promoted as part of the digital strategy. Execute with excellence Impact ■Customer loss as Neutral Treatment customer culpability is not covered and the lack of resolution options frustrates clients and customer-facing employees Negative perceptions circulate on social media ■Customer trust is impaired. ■Increase customer awareness on fraud scams and methods, and use of digital security ■Increase transaction monitoring to identify suspicious activity and minimise losses. Threat posed from major and emerging technology companies Big Techs and FinTechs offer efficient and affordable banking and other services through existing and familiar platforms. Competitors have limited regulations restricting their innovations. Incumbent banks are slower to market new solutions. Transform client experience | Execute with excellence Impact ■Inability to scale disruptive products on legacy systems ■ High number of market misses and innovation write-offs ■ Unrestrained by regulations, competitors' market innovative new products faster ■Loss of customers to competitors. 8 Treatment Neutral ■ Accelerated decommissioning of legacy systems ☐ Building competitive solutions ■ Strategic partnerships to build a platform organisation ■ Participation in Resourcing for ESG risk management regulation development. A lack of dedicated resources to lead the management of ESG risks combined with limited client data sources limits our ability to demonstrate our commitment to sustainable financing. This may increase the cost or limit the availability of capital in international markets. Drive sustainable growth and value Impact ■ Slow development and implementation of ESG risk management processes ■Flight of international capital to entities with established climate risk management ■Client environmental and social requirement breaches not tracked and reported. Neutral Treatment ■ Increased board focus on ESG issues ■Strengthening ESG risk management. 10 Technology and data skills scarcity and talent war Inability to attract and retain talent and the global shortage of future skills (IT engineering, data science, artificial intelligence (AI), robotics, quantum computing), may prevent the successful and timely delivery of strategic IT dependent initiatives and increase salary and consulting costs. Transform client experience | Execute with excellence Impact ■Talent shortage and sub-par recruitments may limit strategic transformation ■Rising consultant costs to fill skills gaps ■ Employee costs may exceed market rate ■ Securing scarce skills may impact local employment metrics ■ Competition for skills leads to bidding wars and high employee turnover. Increasing Treatment ■ Aggressive recruitment and retention of scarce skills ■Future-ready skills development ■Increase focus on internal talent pipeline. Ransomware attacks Criminals could implant the latest malware to infect the group's network and hold our systems and data hostage to disrupt critical customer services. This may also result in large-scale data privacy breaches. Execute with excellence Impact Increasing ■Loss of client and transaction data ■ Corrupted, inaccessible or unusable data ■Disruptions of critical client services ■Client information may be used to commit crime ■Fines or penalties from multiple regulators, reputation damage and loss of trust ■Reputation damage. 13 Increasing Treatment ■ Maintain information asset register ■Regular data back-ups on-site and off-site ■ Business continuity plans ■ Cyber insurance to enable quick access to services. Back-to-back extreme weather events Repeat and severe extreme weather events deplete resources. The impact of drought (i.e three years of water scarcity) or flooding on agriculture reliant economies may be devastating and result in climate refugees. Execute with excellence Impact ■ Depleted disaster recovery resources ■Damage to physical assets and lives lost ■ Food and water shortages ■ Prolonged disruption affecting access to basic goods and services ■ High credit losses and deep economic recession. Treatment ■ Business continuity plans.