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

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 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 to agreed sustainability standards.

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

Failure to deal with environmental issues which may arise.

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 ongoing monitoring during development process.

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

Energy, fuel and carbon inefficiency.

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.

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.

Requirement to complete the mandatory Energy Savings Opportunity Scheme once every four years – potential to deliver a suite of cost effective energy saving activities for both offices and development sites.

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

Increase in waste.

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.

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.

Society & 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.

Annual smoking and hydration awareness information distributed by divisions.

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

Health and Safety

Serious health and safety issue occurs (e.g. serious or fatal injury on site).

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 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 ongoing Health and Safety performance.