7 June 2021

Those of us who have recently launched our group strategies, will also be considering agreeing relevant risk appetites. This will hopefully in turn help us manage relevant risks so that we can achieve our strategic priorities and objectives.

At Peabody we are currently considering our risk appetite to better develop our thinking on risk. This will include how much risk we are willing to take and how much we are willing to put at risk to help us achieve our strategic objectives and priorities in line with our new Group Strategy.

This sounds quite an easy task but there is more to risk appetite than we would think at face value. For example, there are difficult choices and decisions needed to be made when we are trying to reconcile the desirable with the achievable. This goes without even mentioning the non-negotiable rising building and fire safety costs and management of our development and sales risks to ensure we can continue to invest in the existing stock. The list of risks is never ending. So how can we make these choices at Board level? I suppose this is where we rely on the executives to help guide the Board and Audit and Risk Committee to make informed choices and decisions. Nonetheless, these choices are not easy to balance when the desirable option is to be able to prioritise everything we need to focus on.

So I often get asked why is risk appetite relevant when we know exactly what we need to achieve and we have defined our KPIs? And the defined KPIs will help us to stay on track or re-adjust accordingly.

The truth is, registered providers are long term business models and we need to think strategically for the longer rather than shorter term. Thousands of families rely on us to provide their family homes. We need to carefully think through our risks profile and ensure we are able to navigate through the risk environment to enable our residents make the most of their lives. If we do not proactively and consciously make decisions on where we will stretch our resources to manage risks. Where will we draw the line and say that’s enough. We will potentially let our residents down as well as fail to meet the expectations of the Regulator of Social Housing to clearly articulate our risk appetite.

The concept of risk appetite gets even more complex when we mention risk tolerances. We will often start to mention our agreed key risk indicators (KRIs) or key performance indicators (KPIs). When we are really trying to ascertain whether the Board will agree to take more risks and how and vice versa. This is not an easy conversation to have at the top level of the organisation but one that cannot and should not be avoided from. So what are you doing to define your risk appetite to help you manage your strategic risks and deliver your strategic priorities?

Dr Abdul Mohib

Abdul is the Group Head of Risk and Assurance at Peabody

Abdul is a senior professional, passionate about effective leadership with expertise in risk, assurance, governance and internal controls. In particular, he is experienced in leading and setting direction on risk management for a variety of matrix based organizations of varying sizes from different sectors including one of UK’s top employers. Abdul specialises in embedding the Three Lines of Defence models to ensure effective risk assurance and risk governance frameworks. Public protection is the consistent thread throughout his career, spanning from counter-terrorism, food safety, rail transport to public health and most recently social housing.

As well as being an active member of the Institute of Risk Management (IRM), Abdul has been a diligent member of the Government Risk Improvement Group (RIG) where best practice in risk management is shared to further enhance the field across different Government Departments. Abdul is also a member of Deloitte’s Chief Risk Officers forum and currently a BAME mentor in the global ‘INvolve’ mentoring programme. Abdul’s skills and knowledge extends to post-doctoral scientific research, corporate business continuity and incidents management.

Risk appetite:  boon or bane?