ACCOUNTABILITY AND SUSTAINABILITY
RISK MANAGEMENT REPORT
Risk management is integral to our strategic management. We proactively manage risk to remain a competitive and sustainable business, enhancing our operational effectiveness and continuing to create value for the benefit of our employees, shareholders and other stakeholders in line with our growth strategy. The group’s risk management framework is overseen by the audit and risk committee, which has an ongoing responsibility to monitor risk management processes by:
Identifying risk factors that may have a material impact on the business;
Formulating a mitigating response for each area of impact;
Monitoring progress; and
Reviewing identified risks on an ongoing basis and revising responses accordingly.
KEY RISKS AND EFFECTIVE MITIGATORS
1. | Weak/negative economic growth |
Risk: Macro-economic weaknesses could inhibit the self storage market’s growth in line with our projections, resulting in reduced demand and lower income. Mitigators:
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2. | Treasury risk |
Risk: Adverse interest rate movements could result in the cost of debt increasing. Mitigators:
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3. | Property investment and development |
Risk: An inability to acquire or develop new self storage properties which meet management’s criteria may impact the growth of the portfolio. Mitigators:
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4. | Valuation risk |
Risk: External market factors or poor performance may lower our properties’ values. Mitigators:
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5. | HR risk |
Risk: Our people are critical to our success. Failure to recruit and retain employees with appropriate skills may lead to high employee turnover and loss of key personnel and, consequently, lower performance. Mitigators:
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6. | Utility costs |
Risk: Significant increases in utility costs, particularly property taxes and electricity, may put pressure on operating margins. Mitigators:
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7. | Credit risk |
Risk: The group is exposed to tenants’ credit risk which may result in a loss of income. Mitigators:
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8. | Compliance risk |
Risk: The volume and increasing complexity of new and amended legislation often requires the reallocation of financial and human resources. Non-compliance may result in penalties, sanctions or reputational damage. Mitigators:
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