Risk is a natural part of any business and its management is a key activity for the group. We have a long established and effective framework for managing risks. It is the responsibility of management to implement the board’s policies on risk and internal control. Our risk management objectives, along with the current principal risks are set out in the annual report and accounts.
Management maintains a comprehensive risk assessment register with all identified risks. The risk management processes have been set up in such a way so as to ensure all aspects of the business are considered, from strategy through to business execution.
The risk register is reviewed on a regular basis as part of the management reporting process, resulting in the regular assessment of each risk, its severity and all required actions. Derived from the comprehensive register is a shorter register of principal risks, specifically reserved for review by the board. This is mainly, but not exclusively comprised of risks, after mitigation, which score above a certain threshold. This register is reviewed by the board throughout the year, with the board systematically considering the risks, taking into account any changes which may have occurred. Once a year, via the Audit Committee, the board determines whether the system of risk management is operating effectively.
CR is considered during our regular risk management activities and consequently CR risks are integrated into the overall risk register. The principal CR risks faced by the business are highlighted below. These are reviewed on an annual basis by the Bellway4Good Steering Committee, as well as via the existing risk management processes.
| Risk description | Consequence of risk / relevance to strategy | Mitigation |
| Environment | ||
| Changes in legislative and regulatory environmental requirements |
Increased costs Failure to achieve margin and ROCE Inability to source appropriate/compliant materials and/or equipment Damage to reputation |
Technical research into future regulatory effects Member of NHBC and HBF Regular monitoring of legislative requirements and proposed changes Waste management procured via third party contractors and waste segregation on most sites Procurement of timber from sustainable sources, with suppliers being advised of sustainable timber requirements Delivery notes and invoices checked at divisional level to ensure timber supplied is to agreed Forest Stewardship Council (FSC)/Programme for the Endorsement of Forest Certification (PEFC) sustainability standards Annual completion of the Carbon Disclosure Project (CDP) questionnaire, which requires the central collation of data on the quantity of sustainable timber sourced (acts as a check that divisions are sourcing sustainable timber) |
| Failure to deal with environmental issues |
Lack of processes Lack of identification of environmental matters |
Pre-purchase due diligence and ongoing monitoring during development process Corporate responsibility metrics and annual targets set and monitored throughout the year |
| Energy inefficiency |
Inefficient practices leading to increased energy and fuel costs Failure to achieve margin and ROCE Damage to reputation |
In-house assessments on energy consumption are performed on an ad hoc basis when required. Findings are communicated, internal training given and poster campaigns run to reduce usage Newly procured/hired-in compounds now include at least two energy saving devices to reduce development site energy usage. Instructions issued to all divisions to this effect and monthly KPIs monitor compliance Requirement to complete the mandatory Energy Saving Opportunity Scheme (ESOS) every four years which will deliver a suite of cost effective energy saving activities that Bellway can consider for both offices and development sites A process to monitor quarterly energy usage across the business has been implemented, to provide visibility and granularity of energy usage |
| Increase in carbon footprint |
Missed opportunities to mitigate our carbon impact. Direct contribution to climate change. Inefficient practices leading to increased energy and fuel costs Failure to achieve margin and ROCE Damage to reputation |
Monitoring of carbon footprint In-house assessments of carbon footprint are performed with findings and suggested actions communicated |
| Water use inefficiency and increased consumption |
Increased costs as a result of increased water consumption Failure to achieve margin and ROCE Damage to reputation |
Water usage is monitored by Regional Chairmen and Head Office via annual divisional returns Construction use water meters required on all new sites |
| Unknown or unforeseen ecological issue |
Increased costs Failure to achieve margin and ROCE Delays in beginning build Failure to meet customer demands and expectations |
Pre-purchase due diligence by divisional Managing Director, Technical Director and Land Director, including site investigation Use of external consultants at design phase Land acquisition packs, including site design reviewed and approved by Head Office as part of land purchase |
| Construction | ||
| Increase in waste and/or inappropriate waste disposal |
Direct impact on the environment through increased use of scarce resources Increased waste disposal costs Failure to achieve margin and ROCE Damage to reputation |
Engagement with suppliers and contractors to minimise waste Re-use of waste on site where possible ‘Environmental Strategy’ introduced for each new site Waste management procured via third party contractors Waste segregation on most sites Detailed recruitment procedures to ensure Site Managers are recruited with the appropriate skill set Induction training, including waste disposal, provided to all new site staff Independent site inspections Divisional Director and Health & Safety Team inspection regimes |
| Flooding and/or pollution arising from the construction process |
Flood related delays impacting on sites delivery timescales Cost and reputation damage due to flood run-off from sites Failure to achieve margin and ROCE Damage to reputation |
Detailed flood risk assessments are performed on all sites greater than one hectare Detailed flood risk assessments are performed on all sites in flood zones 2 and 3 Flooding history is reviewed during the due diligence process prior to site acquisition Drainage works on sites Flood mitigation works phased throughout the life of a development site Sustainable Drainage System installed as part of the developments All contracts with ground workers include the need for the ground worker to deliver a plan to deal with peak rain flow |
| Society and Economy | ||
| Health and wellbeing of the workforce is not appropriately considered. |
Loss of staff and poor staff retention Inability to recruit the right people Low productivity and motivation |
Related HR policies and procedures across the divisions and central HR support Health awareness information (including smoking and hydration) distributed by divisions Cancer awareness programme with Cancer Research UK Hazard Board at each division, populated with information provided by Head Office |
| Ability to maintain customer care standards |
Adverse publicity Damage to reputation Inability to deliver growth targets Loss of market share |
Documented customer care procedures provide strict guidelines for staff to ensure compliance with the HBF rules surrounding customer satisfaction surveys Regular training provided to all customer care staff Regular customer care visits and audits by Head Office NHBC approval of all Bellway literature in relation to customer satisfaction surveys |
| Inability to recruit and train the right people |
Low productivity and motivation Inexperienced, unqualified or unskilled staff Loss of staff and poor staff retention Increased costs for recruitment Poor business performance Long-term financial loss |
Continued development of the Group Human Resources function and implementation of our people strategy Competitive salary and improved employee benefits Succession plans in place and person dependencies identified and mitigated Divisional activities within schools to raise awareness Programme in place with Partnership Learning Curve Group Regular campaigns running to attract apprentices Increased number of graduates and apprentices eLearning platform rolled out Increased training days per employee |
|
Serious health and safety issue occurs |
Injury to employee Financial loss through fines. Potential prosecution for senior staff Increased insurance costs Damage to reputation |
The Board considers health and safety issues at every meeting Updated Health and Safety Policy in place, outlining detailed roles and responsibilities Formal training matrix to ensure all site staff are appropriately trained on Health and Safety and to provide clear guidelines on when permanent staff should receive their refresh training Reputable suppliers used for all equipment hired by Bellway. As part of the procurement process, suppliers are required to evidence that they have the appropriate public liability insurance Sub-contractors are liable for any equipment they use on site as part of their terms and conditions External consultants perform H&S audits on every site monthly, with high risk developments reviewed more frequently Ad-hoc reviews of H&S practices on site performed by Head Office staff Annual targets and KPIs encourage staff to keep incidents low as well as providing clear focus for the Board on the on-going Health and Safety performance |
