disclosure can help in management of risks
can assist companies to decide on, implement, modify and
evaluate their strategies over time
of the major requirements of good corporate governance being
adequate disclosure to stakeholders, HIV/AIDS disclosure and
its effect on business has recently been a topical and
controversial subject of discussion.
same, HIV/AIDS will have a big effect on almost all
organisations operating in SA, not only through employee
absenteeism and increasing costs of employee benefits but also
because of a general reduction in household income leading to
reduced demand for products and services.
this, every business should investigate how it will be
affected by HIV/AIDS, implement an HIV/AIDS risk management
strategy and disclose to stakeholders how it will handle the
how important HIV/AIDS has become to business. The SA
Institute of Chartered Accountants (SAICA) is to issue
guidelines on disclosure of the disease; the JSE Securities
Exchange SA (JSE) is considering making HIV/AIDS disclosure a
listing requirement; and the Global Reporting Initiative (GRI)
has released guidelines on HIV/AIDS disclosure with the aim of
making this an integral part of voluntary sustainability
this raises the question: what should be disclosed about
HIV/AIDS in companies?
guidelines include the risk-management strategy, policies and
procedures, HIV prevalence and the financial effect of
HIV/AIDS on the organisation.
problem is that companies may find it difficult to determine
the prevalence and cost effect. Companies could even be
reluctant to disclose this information.
instance, a company involved in food-preparation would be
worried about market reaction if it were to disclose that 20%
of its staff is HIV positive. Consumers could indeed react
negatively to such disclosure, despite the fact that it is
impossible to become infected via food, and that for a number
of years HIV-positive people have prepared much of the food
that South Africans eat.
company with an estimated cost of HIV/AIDS of 15% of payroll
in 2010 may feel that there is too much uncertainty about the
estimated effect and so not want to disclose it.
and similar reasons, the GRI has constructed its disclosure
guidelines in two phases. The first (intermediate phase)
includes less detailed disclosure and description, basic level
company complies with these basic level indicators, it can
move to the advanced phase of disclosure by showing
information on some or all of the detailed indicators.
Furthermore, the JSE and SAICA have indicated that their
guidelines will also not oblige companies to disclose HIV
prevalence and the rand effect of HIV/AIDS.
however, a number of counter-arguments. Some commentators
believe that the market already assumes the worst.
words, if a company says nothing about HIV/AIDS, or discloses
only vague information about the effect of the epidemic on
their business, investors assume that the effect is
significant and negative.
addition, if one company in an industry discloses "bad
news" about HIV/AIDS, the first market reaction may be
shock, but immediately investors would ask why their
competitors were not be saying anything about this state of
affairs.Hence, it is argued that disclosure would eventually
lead to more certainty and may, in fact, have a positive
effect on share prices.
investors and analysts are not the only ones interested in
HIV/AIDS disclosure. Unions, government, researchers and civil
society all have an interest. This means that good disclosure
demonstrates to these parties that a company manages the risk
of HIV/AIDS well.
disclosure may lead to a generally positive reaction to a
company. Hence, many companies may actually want to disclose
details about how the epidemic will affect them and how their
risk-management strategies will mitigate this effect.
question is: can reliable figures be derived? For example, a
company may institute a voluntary counselling and testing
programme, or do anonymous testing.
that 80% of the company's 1000 staff come forward to be tested
and that it is found that 80 (or 10%) are HIV positive. Can
one say that 10% of the overall 1 000 staff (or 100 people)
are HIV positive? Probably not. In this case, 200 people
refused to be tested. This could be because they already know
that they are HIV positive, or because they know (or think)
that they are HIV negative, or because they are too scared to
find out, or too worried that someone else may find out.
Hence, while only 80 positive test results were obtained, it
is theoretically possible that the real HIV prevalence is as
high as 28% (280 HIV-positive staff members) or as low as 8%
(80 HIV-positive employees).
way to interpret results is to compare them with all other
statistics that a company may be able to collect. This could
include absenteeism statistics over time, death and disability
statistics, and the results of KAPB (knowledge, attitude,
practice and behaviour) studies.
these figures give an indication of likely HIV prevalence,
provided they are interpreted correctly.
have done considerable work over more than 14 years to develop
an understanding of the effect of HIV/AIDS.
work on HIV/AIDS started in 1989 with the Metropolitan Doyle
HIV/AIDS model. Since then, the AIDS committee of the
Actuarial Society of SA has developed and released a number of
then that a company appoints a suitably experienced actuary to
analyse the effect of HIV/AIDS, useful projections can be made
of the effect of HIV/AIDS without interventions, and then the
financial and demographic effect of certain interventions such
as education programmes, treatment programmes (both with and
without antiretroviral therapy), changes in employee benefits,
changes in recruitment patterns and so on can be quantified.
an actuarial effect study, the company would be in a position
to decide on and implement a risk-management strategy, modify
its current strategy and evaluate the implemented strategy
that decisions on whether to provide antiretroviral therapy
can be made on an informed basis.
for smaller businesses a full actuarial effect study would not
be viable. Instead, such businesses should collect as much
information as possible on how HIV/AIDS affects their
organisations, and then take advice on the best way to handle
this going forward.
actuaries can advise on risk-management strategies, even in
organisations that are too small to conduct a statistically
significant actuarial HIV/AIDS effect study.
HIV/AIDS disclosure should not be seen as a threat to
companies, but rather as an opportunity to show how well a
particular company responds to one of the most serious
challenges to business in SA.
Stipp is a member of the AIDS Committee of the Actuarial
Society of SA and a consulting actuary at B&W Deloitte.
(Source: Business Day, 29 April 2003)