Strategic Report Principal Risks ManagingRisk
The Board recognises that there are risks and uncertainties that could have a material impact on the Group’s results.
Principal risk
Trend
1 Political and economic
2 Market cycle
3 Regulatory and tax
Risk management provides a structured approach to the decision making process such that the identified risks can be mitigated and the uncertainty surrounding expected outcomes can be reduced. The Board has developed a risk management policy which it reviews on a regular basis. The Audit and Risk Committee carries out a detailed assessment of all risks, whether investment or operational, and considers the effectiveness of the risk management and internal control processes. The Executive Committee is responsible for implementing strategy within the agreed risk management policy, as well as identifying and assessing risk in day-to-day operational matters. The management committees support the Executive Committee in these matters. The small number of employees and relatively flat management structure allow risks to be quickly identified and assessed.
The Group’s risk appetite will vary over time and during the course of the property cycle. The principal risks – those with potential to have a material impact on performance and results – are set out on the following pages, together with mitigating controls. The UK Corporate Governance Code requires the Board to make a Viability Statement. This considers the Company’s current position and principal and emerging risks and uncertainties combined with an assessment of the future prospects for the Company, in order that the Board can state that the Company will be able to continue its operations over the period of their assessment. The statement is set out in the Directors’ Report.
4 Climate change
5 Portfolio strategy
6 Investment
7 Asset management
8 Valuation
9 People
10 Finance strategy
11 Capital structure
The risks associated with the pandemic have impacted many of the principal and emerging risks set out here. There has been an impact on the Group’s rent collection and cash flow, although this has been less significant than originally envisaged. We have a diverse portfolio spread across the UK, with around 350 occupiers in a wide range of businesses. The cash flow arising from our occupiers underpins our business model. We are continuing to let space, although the number of transactions has reduced since
the pandemic began. The material uncertainty clause, introduced by our valuers in March 2020, was subsequently removed. We have considered in our Viability Statement the potential impact of various scenarios resulting from Covid-19 on the business.
Our Covid-19 response
The global Covid-19 pandemic has caused an unprecedented level of disruption to economies globally. Restrictions have been in place to varying extents since the start of the pandemic in March 2020. Some sectors of the economy have been more severely impacted, particularly retail, leisure and tourism. However, since the start of the year the vaccine programme has gathered pace and there is a planned route to easing restrictions and opening up the economy.
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