Managing Risk
How we manage risk
Protecting long-term value creation
The robust management of risk is central to the Group’s strategy and ability to create value over the long-term. The UK housing market is cyclical in nature and subject to fluctuations in economic conditions and changes in the political, regulatory and legislative environment
To manage these specific challenges, the Group has a well-established framework in place for risk management, designed to enable the effective and timely identification and assessment of risks, and ensure ongoing risk mitigation.
The Board has overall responsibility for the assessment and effective management of the Group’s risks. The Group’s risk management framework supports the Board in performing these duties and ensuring an appropriate focus on principal, strategic and emerging risk areas. Comprehensive supporting processes are in place to identify, monitor, mitigate and control risks, through the work of the Audit Committee, Risk Committee, Group Internal Audit department and operational management teams. This includes a wide-ranging annual survey of Board and senior management assessments of key risk issues and emerging risks. Collectively, these processes provide an additional ‘bottom up’ approach, ensuring the Board has visibility of the Group’s full risk landscape, while remaining focused on the most significant threats and trends.
Risk Management Framework
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Strategy and risk identification |
The Board has well-established processes to monitor the Group’s risk landscape. In addition to routine KPI reporting against principal risks, the Board reviews the Principal and Strategic Risk Register in full on a regular basis. This provides the latest assessment of a range of criteria for each of the Group’s key risks, including:
The Board also routinely monitors feedback and assessments of changes in strategic and emerging risks with the potential to develop into future principal risks. This includes reviewing the results of a detailed annual risk survey.
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Audit Committee | Risk Committee | Group Internal Audit department |
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Group Functions | Operational Management | |||||||
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Our principal risks
In line with the UK Corporate Governance Code, the Group defines its principal risks as those considered to have a potentially material impact on its strategy and business model, including its future performance, solvency, liquidity and reputation. The Group’s strategy focuses on minimising financial risk and deploying capital at the right time in the housing market cycle, recognising the inherent risks and cyclical nature of the housing market. This, together with an agile, experienced and responsive management team, and robust risk management framework, has established a highly resilient business able to address a range of future economic scenarios.
Material Issues
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The Group recognises the value of stakeholder engagement in ensuring the creation and protection of long-term value. A materiality assessment was performed in 2020 in order to identify important issues for our stakeholders, which were likely to have an impact on our business in the short to medium term. This assessment links to the Group’s risk management framework, and contributes directly to the identification, management and mitigation processes, as illustrated.
Our purpose, strategy and business model |
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Risk management framework |
which is enhanced by which delivers |
Sustainable value for all stakeholders |
Aligning material issues and principal risks
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Material issues | Principle risk |
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