43 We have outsourced several key insurance company functions, such as research and development, to the ARC Agency. Any failure on its part could disrupt ARC Ltd.’s operations. RESPONSE At the end of every season, we improve our seasonmonitoring procedures, thereby improving our underwriting and other outsourced operational procedures. We also review the documentation of processes and procedures to account for new functions or enhancements. Growth barriers exist because a finite number of African nations limit our market potential. This underpins the importance of effective engagement to address a possible lack of understanding of our disaster risk tools or perceptions of costly premiums. Should the pool not grow, this could result in unsustainable expenses and insufficient capital to refund Class C contributors. RESPONSE Our Inclusive Growth Strategy details ARC Ltd.’s market and product diversification, which aims to ease dependency on the sovereign market for growth and sustainability. Our strategy also includes a premium financing plan to address affordability. This is the risk of a security breach of our IT systems. Such a breach would affect data integrity or availability, cause financial loss or business disruptions, and negatively impact our brand. RESPONSE Rapid risk assessments are done every year, including recommendations to mitigate cyber threats. Employees also receive training annually to improve cyber security awareness. STRATEGIC RISK OUTSOURCING RISK INSUFFICIENT POOL GROWTH CYBER RISK OPERATIONAL RISK OUR MATER I AL MATTERS AND R I SKS
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