Risk Management

Jump to section

• Overview & contents
• i. Important Notice
• 1. Executive Summary
• 2. Transaction and Funding Summary
• 3. Business Overview
• 4. Market Analysis
• 5. SWOT and Competitive Position
• 6. Service Offering and Revenue Model
• 7. Operations
• 8. Regulatory and Compliance Framework
• 9. Business Development and Client Acquisition
• 10. Management and Organisation
• 11. Financial Projections
• 12. Working Capital: The Central Finding
• 13. Funding Structure and Debt Service
• 14. Break-Even
• 15. Sensitivity and Scenarios
• 16. Risk Management
• 17. Implementation Roadmap
• 18. Investment Returns
• 19. Key Performance Indicators
• 20. Key Assumptions
• 21. Conclusion
• A. Appendix A: Consolidated Financial Summary
• B. Appendix B: Application and Sources of Funds
• C. Appendix C: Debt Schedules
• D. Appendix D: Risk Register
• E. Appendix E: Glossary

16.1 The risks that matter

Working capital is the risk that ends this business rather than damaging it. Trade debtors absorb 44 per cent of cumulative EBITDA and the facility is drawn to within R0.17 million of its limit by Year 5. It is managed by a dedicated credit controller from Year 2, invoicing within two business days of month end with the deployment record attached, client credit assessment before first deployment, concentration limits and a weekly debtor age review.

A serious incident on a protective detail is the risk that is asymmetric to everything else. Insurance responds to the financial consequence but not to the licensing or reputational one. It is managed by the operating principles in Section 3.2 stated as absolutes: no deployment without current registration, competency and qualification; every detail against a written threat assessment; live control room monitoring with a defined escalation matrix; and fatigue-limited rostering.

Wage escalation above rate escalation is the risk that operates continuously and invisibly. At a 70-basis-point differential the gross margin compresses 20 basis points a year without any competitive pressure. It is managed by linking client escalation to the wage determination rather than to CPI, by pricing CPI-linked contracts to absorb the differential across the term, and by shifting mix toward advisory and training.

Officer supply is the risk that constrains growth. PSIRA registration alone takes six to twelve weeks, mandatory pre-registration applies to new training entrants from January 2026, and every competitor bids for the same pool. It is managed by the academy, which manufactures the pipeline rather than bidding for it, and by maintaining recruitment at least a quarter ahead of deployment need.

PSIRA registration lapse is a credit event rather than an administrative one, because it is an event of default under the term facility. It is managed by registration currency tracked per officer as a key performance indicator and certified quarterly to the lender.

16.2 Risks sized against the plan

16.3 Controls

• No officer is deployed without current PSIRA registration, firearm competency where armed, a valid close protection qualification and Level 2 first aid certification, without exception.
• Every dedicated detail operates against a written threat and vulnerability assessment refreshed at defined intervals and after any material change in the principal’s risk profile.
• Client escalation clauses are linked to the applicable wage determination; CPI linkage is priced to absorb the differential over the full contract term.
• The debtor age analysis is reviewed weekly by the finance director and forms part of the monthly lender pack.
• No single client exceeds a defined share of the debtor book, and every client is credit-assessed before first deployment.
• No distribution is made until coverage exceeds 2.00 times for two consecutive tests and the facility is drawn below 70 per cent of its limit.