Zama Clothing — Risk Management Framework
A comprehensive risk management framework has been developed to identify, assess, and mitigate the principal risks facing the business. Each risk is rated on a probability and impact matrix and assigned specific mitigation strategies:
Section 11 · Business Plan
Risk Management Framework
A comprehensive risk management framework has been developed to identify, assess, and mitigate the principal risks facing the business. Each risk is rated on a probability and impact matrix and assigned specific mitigation strategies:
11.1 Risk Register
A comprehensive risk management framework has been developed to identify, assess, and mitigate the principal risks facing the business. Each risk is rated on a probability and impact matrix and assigned specific mitigation strategies:
| Risk Category | Prob. | Impact | Mitigation Strategy |
|---|---|---|---|
| Import Competition | High | High | Differentiate on speed, customisation, and BEE compliance. Develop cost efficiencies through lean manufacturing and scale. |
| Exchange Rate | High | Medium | Hedge 50% of USD-denominated purchases through forward contracts. Increase local sourcing to 40%+. |
| Load-Shedding | Medium | High | 250 kVA backup generator plus 100 kWp solar PV system. Shift production schedules to off-peak hours. |
| Labour Unrest | Medium | Medium | Above-market wages, skills development, and employee share scheme. Proactive union engagement. |
| Raw Material Costs | High | Medium | Long-term supply contracts with volume discounts. Dual-sourcing from 3+ countries. 8-week safety stock. |
| Customer Concentration | Medium | High | Diversify across 4 channels. No single customer >15% of revenue. Build pipeline of 50+ active accounts. |
| Quality Failures | Low | High | ISO 9001 quality system. AQL 2.5 inspection. Dedicated QA team. Product liability insurance. |
| Cash Flow Gaps | Medium | High | R6M working capital reserve. Invoice factoring facility. Credit insurance on major accounts. |
| Regulatory Changes | Low | Medium | Monitor DTIC policy. Maintain industry association membership. Engage proactively with policymakers. |
| Technology Obsolescence | Low | Low | Annual capex budget for equipment upgrades. Technology advisory board. |
11.2 Insurance Programme
A comprehensive insurance programme will be implemented covering: all-risks property insurance, business interruption insurance (12-month indemnity period), product liability insurance (R20 million limit), employer’s liability and workmen’s compensation, goods in transit, key person insurance for CEO and Production Director, and cyber and data insurance. Estimated annual premium: R850,000–R1,100,000.
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