The seventh annual Sector Risk Profile

Thursday 17 October 2019

The Regulator of Social Housing (RSH) expresses its concerns over growing risks for registered housing providers, highlighting a rise in strategic and operational risks facing the sector.

The Regulator of Social Housing launches the Sector Risk Profile 2019

Regulator warning

The Regulator has published a cautious view of the next year for housing providers.

Brexit impacts are at the top of the worry list. The Profile warns: ‘it is more important than ever that all providers test and understand the implications. We expect all boards to have well-developed mitigation strategies in place should there be a material macro-economic shock in the event of exiting the EU without a deal.’

The Sector Risk Profile also states: ‘the potential for significant uncertainties around Brexit and the need to respond to evolving requirements following the Grenfell Tower fire, mean risk in the sector is growing.'

The Queen’s speech on 14 October introduced legislation for a new building safety regulator to oversee construction of high-rise housing. The legislation underpinning the new regulator would enact important safety reforms.

The Profile highlights the importance of adequately investing in existing stock, as well as ensuring necessary scrutiny of the build quality of new stock.

A changing economic climate and exposure to a slowing housing sales market, could become a serious strategic risk for housing providers.

The Profile states the most significant risks boards must manage and mitigate include:

  • Health and safety compliance
  • Stock condition and asset management
  • Market sales exposure
  • Reputational risk
  • Rents.

Fiona MacGregor, Chief Executive, RSH: “alongside some weakness in demand in the housing market and the need to respond to evolving building safety requirements, this year’s risk profile highlights the importance of adequately investing in existing stock, as well as ensuring necessary scrutiny of the build quality of new stock. This includes satisfying statutory health and safety requirements and effectively managing all outsourcing arrangements. It demands high-quality data on the condition of properties.”

Carolyn Halpin, Senior Assurance Manager, Thirteen Housing Group, and ALARM Housing Group Chair: “the majority of housing organisations will have had a weather eye on these risks, will have modelled them into their stress testing arrangements, and will have identified their mitigation actions in the event they materialise.”

However, Carolyn cautions registered providers on: “the unknown unknowns of Brexit and the impact on the macro-economics and a potential change of government on housing policy provides uncertainty. It requires careful consideration in strategic planning and reporting to boards.”

Using the Sector Risk Profile

Carolyn acknowledges the value of the RSH Profile: “It is a valuable and welcome tool for housing organisations and their boards. It provides a means to challenge strategic risk registers, and governance and assurance frameworks. It helps ensure organisations are capable of managing and responding to these risks, as well as delivering core services.”

This is the seventh year of the annual publication, which is designed to help registered providers, board members and others to understand the operating environment and to think strategically about how organisations can manage risks.

Boards of registered providers are responsible for managing the risks their organisations face. Those actively involved in the management of risk need to ensure dynamic risk reporting and clarity of identified consequences for their boards.

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