Development risks

The housing market will always fluctuate – affecting sales of low cost home ownership and outright sale, an increasing percentage of the Group’s Development programme.

The Group recognises that sales risk is one of the key financial risks to the organisation with around £100M worth of sales going through each year. The Group has an internal Sales and Marketing team, part of Circle Living, to assist managing this risk and performance is regularly monitored by officers and members.

The Group has a robust Risk Management Strategy as a whole and the Development team has worked with the Risk Manager to identify the key risks of the Development function and how these can be best controlled / managed by the group. The Development function and all key risks are therefore constantly reviewed by officers and board members as part of the Group’s risk management process.

In addition, every new development which is undertaken by the group must go through an investment and appraisal process through the Group's Capacity Panel. This not only assesses the financial risk the Group will face in undertaking a new development, but also the risks that are faced in terms of ongoing management maintenance, asset management, etc.

The Capacity Panel will also look at the risk of the Group not undertaking the development (in terms of damage to reputation and relationships, etc.) and therefore weighs up the risk and reward the Group faces on a scheme by scheme basis as well as a scheme forming part of the wider development portfolio.

The IAP process also assesses the Group’s capacity for development and will assess the type of scheme that is being brought forward by the Development team against the global development programme and budget. This process will inform the Group's Executive Director Board of the overall make-up of the development programme and whether more housing for rent / low cost home ownership or outright sale should be considered to balance out the portfolio, whilst maximising the Group’s development capacity to deliver its development targets.

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