Managing risk
Effective risk management ensures Longhurst Group can operate successfully in all circumstances. Recognising and mitigating risks allow the Group to achieve its objectives and overcome any threats to success, posed by both internal and external environments.
Risk management framework
Managing risk is integral to good management practice throughout the organisation, incorporated into strategic and operational planning processes and performance management.
Risk management is the responsibility of the Board, with different committees, such our Audit and Risk Committee or People and Renumeration Committee, undertaking a more detailed review of risks that may impact the Group’s strategy, operations, financial or legislative compliance.
The strategic risk register is reviewed each quarter by the Group Board and Audit and Risk Committee. The Keystone and Libra Boards, along with the Development and Asset Improvement and Finance and Treasury Committees, review the risks within their area of responsibility.
We use the ‘three lines of assurance’ on controls within the risk system, which forms the basis of the controls assurance reporting mechanism to boards and committees.
Our online risk management database provides real time access to risk reports and key areas of assurance. Our risk system enables relevant and focused board reporting in relation to strategic and operational risks.
Risk appetite
As a not-for-profit business, we must clearly act in ways that minimise the risk of serious financial or other failures.
The Board’s decisions are informed by our regulator’s requirement that social housing assets shouldn’t be placed at undue risk.
The Group is also required by government to operate in a competitive environment, to use substantial amounts of private finance to deliver new homes and to comply with many complex areas of law.
We recognise that we’re not able to operate in a ‘risk free’ environment and that our framework of internal controls can only provide reasonable and not absolute assurance.
We’re aware that control weaknesses and compliance issues can still arise. The framework of key controls that we operate is designed to minimise and manage the impact of these risks materialising.
The Group Board and Executive Team regularly review and amend our risk appetite linked to the Group’s Improving Lives 2025 strategy and key areas of business.
Principal risks and uncertainties
The following six risks currently represent the greatest potential impact to our business and the achievement of our business plan objectives.
Strategic risk register
In addition to the six principal risks highlighted above, the Group’s strategic risk register contains a further 12 risks. The total 18 strategic risks are listed below and plotted on the heat map, with the residual rating displayed following mitigation measures taken by the Group.
Major risk
Probability: Likely
A: Failure to deliver the development programme, sales and joint ventures
B: Asset management not meeting required standards and associated issues
Serious risk
Probability: Likely
C: Mobilisation of three new repairs contractors, and ensuring service delivers improvements to customers
D: Care and Support business not delivering results and services (CQC Standards) in line with Business Plan
E: Not having ICT capacity to meet internal growth and change aspirations and external threats (i.e. cyberattacks)
I: Failure to have accurate, timely, relevant and assured data and supporting this through consistent IT approach (MS Dynamics)
J: Current levels of inflation
K: Government policy changes which impact on our Business Plan goals and reputation
L: Failure to deliver financial performance in line with BP, investor expectations - impact on our credit rating
M: Risks from contracts, legal requirements or supplier failure
N: Failure to adhere to legislation and requirements derived from the Social Housing White Paper
Probability: Possible
F: Not having effective financial management, affordable funding, and covenant defaults
G: Failure to comply with legislation and regulatory requirements
H: Significant health and safety incident (gas/electrical safety, fire, legionella, asbestos)
O: Risks around board governance, leadership and improving performance
Moderate risk
Probability: Likely
P: Failure of the Group to protect and enhance its reputation with all stakeholders
R: Not retaining and recruiting key staff, and failure of succession planning
Probability: Possible
Q: Potential of fraud to adversely impact on group activities
© Longhurst Group Limited
Longhurst Group Ltd is a charitable housing association registered in England as a community benefit society (Reg. No. 8009) and registered with the Regulator of Social Housing (No. L4277).
Registered Office: 1 Crown Court, Crown Way, Rushden, Northamptonshire NN10 6BS. VAT Reg No. 326 0270 36. A member of the National Housing Federation.