CR Risk Management

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 maintain 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 and description and how it has changed during the year Relevance to strategy Mitigation
Environmental Legislation

Changes in legislative and regulatory environmental requirements.

This risk has broadly remained the same.

Increased need for research and development to meet new legislation/regulations.

Increased costs as a result of new legislation.

Inability to source appropriate/compliant materials and/or equipment.

Failure to achieve margin and ROCE.

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 segregated 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 agreed to Forest Stewardship Council and Programme for the Endorsement of Forest Certification sustainability standards.

Annual completion of the Carbon Disclosure Project questionnaire which requires the central collation of data on the quality of sustainable timber sourced.

Energy & Carbon

Energy, fuel and carbon inefficiency.

This risk has broadly remained the same.

Missed opportunities to mitigate our carbon impact.

Increased energy and fuel costs.

Failure to achieve margin and ROCE.

Direct contribution to climate change.

Damage to reputation.

In-house assessments on energy consumption are performed on an ad hoc basis when required. Findings are communicated, internal training is given and poster campaigns are run to reduce usage.

Newly procured/hired-in compounds now include at least two energy saving devices to reduce development site energy usage. Instructions have been issued across the Group to this effect.

Six-monthly statistics collect information on the number of compounds in each division with at least two energy saving devices fitted.

The mandatory Energy Savings Opportunity Scheme needs to be completed once every four years which will deliver a suite of cost effective energy saving activities that we can consider for both offices and development sites.

Waste

Increase in waste.

This risk has increased in line with the increase in units built this year.

Direct impact on the environment through increased use of scarce resources.

Increased waste disposal costs.

Failure to achieve margin and ROCE.

Damage to reputation.

Waste management plans at sites.

Engagement with suppliers and contractors to minimise waste.

Re-use of waste on sites where possible.

Inappropriate waste disposal.

This risk has been separately identified for the first time this year.

Increased waste disposal costs.

Failure to achieve margin and ROCE.

Damage to reputation

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.

Water

Flooding and/or pollution arising from the construction process.

These risks have broadly remained the same.

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.

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.

Water use inefficiency and increased consumption.

This risk has been separately identified for the first time this year.

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.

Environmental Issues

Failure to deal with environmental issues which may arise.

This risk has been separately identified for the first time this year.

Build delays as a result of an issue being exacerbated.

Increased costs to resolve the issue.

Failure to achieve margin and ROCE.

Damage to reputation.

Pre-purchase due diligence and on-going monitoring during development process.

Corporate responsibility metrics and annual targets set and monitored throughout the year.

Construction

Inability to secure appropriate materials.

This risk has broadly remained the same.

Insufficient material availability at competitive prices can delay developments and affect the Group’s ability to deliver to customer expectations.

Group deals in place with key suppliers, managed by Group Procurement Manager.

Due diligence undertaken prior to entering contracts with suppliers.

More than one supplier for some materials.

Recruitment & Retention

Inability to attract and retain appropriate personnel, as well as shortages of skilled trades, including sub-contractors.

This risk has increased during the year as the labour market has become more competitive.

Increased labour costs and lack of appropriately skilled personnel can delay developments and affect the Group’s ability to deliver to customer expectations.

Identifying training needs and allocating appropriate resources.

Site workers (including sub-contractors) are fully accredited under Construction Skills Certification Scheme (‘CSCS’).

Making sure competitive remuneration policies are in place.

Graduate and apprentice training programmes are in place across the Group.

Employee Wellbeing

Health and wellbeing of the staff is not appropriately considered.

This risk has broadly remained the same.

Underlying health issues leading to increased absence and reduced productivity / motivation in the workforce. 

Related HR policies and procedures across the divisions and central HR support.

Annual smoking and hydration awareness information distributed by divisions.

Hazard Board at each division, populated with information provided by Head Office.

Health and Safety

There are significant risks to health and safety inherent in the construction process.

This risk has broadly remained the same. 

As well as the moral and legal obligation towards health and safety, injuries to employees, sub-contractors, and visitors to all work areas could cause delays in construction, administrative failures and poor sales.

Health and Safety issues could also result in reputational damage, criminal prosecution and civil litigation. 

The Board considers health and safety issues at each Board meeting.

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 refresher training.

All subcontracted staff required to have a valid Construction Skills Certification Scheme (CSCS) card to work on a Bellway site.

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.

Subcontractors 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.

Industry best practice is adopted on all sites.

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.