CORPORATE GOVERNANCE REPORT g. Regular, independent testing and assessments to determine the adequacy, completeness and effectiveness of the internal control system and its usefulness to the PPS Group Boards and Senior Managers for controlling the operations. Control functions In terms of the Prudential Standard GOI 3: Risk Management and Internal Controls, an insurer must establish and adequately resource at least certain control functions. The following four key control functions are established, resourced and in place within the two PPS Group insurance companies: • Risk management Function • Actuarial Function • Compliance Function • Internal audit Function. The control functions are structured to include the necessary authority, independence, resources, expertise, access to the PPS Group Boards and all relevant employees, as well as information to enable them to exercise their authority and perform their responsibilities. The performance of the control functions is reviewed periodically by the PPS Group Boards and/ or relevant committee/s. The control functions are required to complete regular self-assessments of their respective functions. The roles and responsibilities of the control functions are documented and reviewed on an annual basis and are approved by the PPS Group Boards. The control functions must avoid conflicts of interest and where conflict arises, it will be brought to the attention of the PPS Group Boards. A control function may be outsourced in accordance with the Prudential Standard GOI5: Outsourcing by Insurers and the PPS Insurance Outsourcing Policy, taking into consideration the nature, scale, and complexity of the business, risks, and legal and regulatory obligations. The Actuarial Control Functions are performed by Deloitte in terms of outsourced arrangements. Mr G T Waugh of Deloitte serves as the Head of the Actuarial Control Function for PPS Insurance. Mr J van der Merwe of Deloitte serves as the Head of the Actuarial Control Function for PPS Short-Term Insurance. The Internal Audit Control function is performed by KPMG in terms of an outsourced arrangement. Ms I Fourie of KPMG serves as the Head of the Internal Audit Control Function for both insurance companies in the PPS Group. The Compliance and Risk Management Control Functions are performed in-house. Mr L du Plessis and Ms R Grobler serve as the Heads of the Compliance Function and Risk Management Function for PPS Insurance, respectively. For PPS Short-Term Insurance, Mr H van Heerden serves as the Head of the Risk Management Function, while Mr P Nkosi serves as the Head of the Compliance Control Function. The existence of the control functions does not relieve the PPS Group Boards, or Senior Management, from their respective governance and related responsibilities. The governance framework will continue to evolve to ensure compliance with emerging legislation and to enhance the ability of the PPS Group Boards, Senior Managers and Heads of control functions to manage PPS soundly and prudently. The PPS Group Actuarial, Audit, Risk, Technology Steering, Remuneration and Social and Ethics Committees fulfil a key role in ensuring good corporate governance within the PPS Group. Processes are reviewed regularly to ensure compliance with legal obligations and codes of governance. It is confirmed that the heads of the Control Functions: • Are fit and proper • Have sufficient seniority and authority to be effective • Have reporting lines that support their independence • Have unrestricted access to relevant information • Have direct access to the PPS Group Boards or relevant committee/s, without the presence of Senior Managers if so requested • Have the freedom to report to the PPS Group Boards or relevant committee without fear of retaliation from Senior Managers • Have appropriate segregation of duties from operational business line responsibilities • Must report regularly to the PPS Group Boards or relevant committee/s, especially on matters of non-compliance with legislation. There are adequate policies and procedures in relation to the appointment, dismissal and succession of heads of control functions. The appointment, performance assessment, remuneration, disciplining and dismissal of the head of each control function must be conducted by the relevant committee with the approval of, or after consultation with, the PPS Group Boards. 56 Corporate governance report
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