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 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
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

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