The Main Board has the ultimate responsibility over the effective management of the risks we face in order to achieve our strategic and financial objectives.
As part of our risk assessment framework, a detailed review is carried out of the Company’s strategic objectives and identifies the principal risks and material concerns we face as a business. These headline risks are then approved and compiled into a risk register.
The risks and material concerns are then further broken down into components and sub level risks. These sub level risks are reviewed by each Divisional Board, individually assessing the probability and impact of each risk. In order to mitigate, control and continually monitor these risks, appropriate internal controls are implemented.
Any new risks identified are assessed one at a time, evaluating any potential impact to our business and the likelihood of its occurrence. These new risks are then fed back to the risk owners who use this assessment to inform their formal review, ensuring there are preventive and detective controls in place and included in the risk register.
We have reviewed the risks pertinent to our business in the six months to 31 December 2017 and which we believe to be relevant for the remaining six months to 30 June 2018. These have not changed materially from those outlined in our 2017 Annual Report.
Risk
UK housing market conditions have a direct impact on our business performance and Help to Buy continues to provide significant support.
Risk Owner
Group Chief Executive
Key Controls
- The UK housing market is closely monitored, with management responding if there are any changes in market conditions.
- Regular review and product updates in response to demand in the market.
- Weekly review of the sales at both Group and Divisional level.
- Regular review of competitor actions and their performance.
- Ongoing and regular monitoring of Government policy.
Risk
Lending criteria and deposit requirements for mortgages remain key issues in the current environment.
Risk Owner
Group Finance Director
Key Controls
- Proactively engage with the Government, Lenders and Insurers to support the housing market.
- Expert New Build Mortgage Specialists provide updates on regulatory changes.
Risk
The Group requires appropriate borrowing facilities in place for its short term liquidity and long term funding.
Risk Owner
Group Finance Director
Key Controls
- Suitable committed banking facilities with covenants and headroom.
- Regular review of our banking covenants and capital structure.
- Regular communication with our investors and relationship banks.
- Robust forecasting and budgeting process in order to provide a clear view of future cash flows.
Risk
The failure of our customer services could undermine Redrow’s business performance.
Risk Owner
Group Communications & Customer Services Director
Key Controls
- Customer First initiative continues to further improve our engagement with our customers.
- ‘My Redrow’ website to support our customers purchasing their new home.
- Regular review of our marketing and communications policies at Group and Divisional level.
Risk
The ability to purchase land suitable for our products and the timing of future land purchases are fundamental to the Group’s future performance.
Risk Owner
Group Development Director
Key Controls
- Proactive monitoring of the market conditions to implement a clear defined strategy at both Group and Divisional level.
- Experienced and knowledgeable personnel in our land, planning and technical teams.
- Use of third party legal resources for larger site acquisitions in order to reduce risk.
- Effective use of our Land Bank Management System to support the land acquisition process.
Risk
The inability to respond and adapt to the changing planning and regulatory environment will adversely impact upon our ability to comply with the regulatory requirements of the industry.
Risk Owner
Group Development Director
Key Controls
- Close monitoring of the planning and regulatory environment at Group and Divisional level.
- Communication of proposed changes across the Group through the Executive Board.
- Well prepared planning submissions addressing local concerns and displaying good design.
Risk
The failure to design and build a desirable product for our customers at the appropriate price may undermine Redrow’s ability to fulfil its business objectives.
Risk Owner
Group Design and Technical Director
Key Controls
- Regular review and product updates in response to the demand in the market.
- Design focused on high quality build and flexibility to planning changes.
- Regular site visits and implementation of product changes to meet demands.
Risk
The loss of key staff and/or our failure to attract high quality employees will inhibit our ability to achieve our business objectives.
Risk Owner
Group Human Resources Director
Key Controls
- Personal Development Programmes supported by National training centres at three locations.
- Graduate training, Undergraduate placements and Apprentice training programmes to aid succession planning.
- Remuneration strategy to attract and retain talent within the business is reviewed regularly and benchmarked.
- Regular INsight e-magazine and annual employee survey create a framework for strong communication.
Risk
Instances of non-compliance with Health & Safety and Environmental regulations could expose our people, the environment and Redrow’s reputation.
Risk Owner
Group Health Safety & Environmental Director
Key Controls
- Dedicated team operating across the Group to ensure compliance of appropriate Health and Safety standards.
- Undertaking regular visits and audits on sites.
- Internal and external training provided to all employees.
- Divisional Construction (Design and Management) Regulation (CDM) inspections carried out to assess our compliance with our client duties under CDM.
- Health and Safety discussion at both Group and Divisional level board meetings.
- CDM competency accreditation requirement as a minimum for contractor selection process.
Risk
The failure or inability to expand capacity of a key supplier, main contractor or subcontractor may disrupt our ability to manage our production process in an efficient and cost effective manner.
Risk Owner
Group Commercial Director
Key Controls
- Use of reputable supply chain partners with relevant experience and proven track record.
- Monitoring of subcontract supply chain to maintain appropriate number for each trade and to identify any potential shortage in skilled trades in the near future.
- Subcontractor utilisation on sites monitored to align workload and capacity.
- Bi-annual quality assessments of suppliers, contractors and subcontractors.
- Group Monthly Product Development meetings to identify and monitor changes in the regulatory environment.
Risk
Failure of the Group’s IT systems and the security of our internal systems, data and our websites can have significant impact to our business.
Risk Owner
IT Director
Key Controls
- Communication of IT policy and procedures to all employees.
- Regular systems backup and storage of data offsite.
- Internal specialist IT security personnel.
- Use of third party entity to test the Group’s cyber security systems and other proactive approach for cyber security including Cyber Essentials Plus accreditation.
- Proactive approach to GDPR compliance.
Risk
A significant fraud or uninsured loss could damage the financial performance of our business.
Risk Owner
Finance Director, Operations
Key Controls
- Systems, policies and procedures in place which are designed to segregate duties and minimise any opportunity for fraud.
- Regular Business Process Reviews undertaken to ensure compliance with procedure and policies followed by formal action plans.
- Timely management reporting.
- Insurance strategy driven by business risks.