Operating environment and risk management Operating environment
The UK entered into a new relationship with the EU in January. There have been reports of this affecting levels of imports and exports, with traders currently being more cautious. The long-term impact will depend on the trade situation once new arrangements become more familiar and initial issues are ironed out.
The COVID-19 pandemic has had an unprecedented impact on our external and internal operating environments, bringing numerous challenges and some opportunities: •
2020 saw the largest fall in GDP on record, with the economy shrinking by 9.9%. Most commentators are forecasting a rebound in 2021, with projected annual growth of 4% this year, and a return to pre-COVID levels by the middle of 2022, with an increase of 7.3% next year. Government borrowing also hit record levels, with borrowing expected to total £234bn in 2021-22
Our risk management ethos
• At the beginning of 2021, there were still 4.7 million employments furloughed
Thirteen’s strategic assurance framework ensures we are prepared and respond effectively and appropriately to challenges and opportunities. It consolidates our approach to assurance and identifies the critical components of an effective assurance framework, including risk management, stress testing, internal controls, business continuity, internal audit, insurance and governance.
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The framework enables Board and Committee members, the leadership team and service directors to better understand, manage and review assurance arrangements, ensuring that the outcomes of assurance activity are used constructively to inform strategic decisions and protect and improve the business.
The latest unemployment figures show that the unemployment rate in Great Britain had risen to 4.2%, which is forecast to peak at 6.5% during 2021. The UK’s highest unemployment rate estimates were Hartlepool at 8.1%, followed by Birmingham at 7.8% and Middlesbrough at 7.7%.
Overall, this will have a profound impact on the communities we operate in and on our customers.
A suite of monitoring arrangements, activities and reviews ensure decisions are based on intelligent risk management and an appreciation of the impacts these decisions have on the group’s strategic objectives, customers and colleagues.
The level of impact still depends on how effective the stimulus measures are that the Government has introduced, the continued roll-out of the vaccine and the success of the Government’s roadmap out of lockdown. The Government’s budget announcements in March focused on supporting those unable to work, funding to boost jobs and skills, and investment in areas in most need of ‘levelling up’.
The Thirteen Board has ultimate accountability and responsibility for ensuring appropriate and effective assurance and risk management arrangements are in place and delegates authority for specific elements to the Audit and Risk Committee.
Analysis shows that areas with the highest levels of unemployment and issues such as ill-health have been disproportionately impacted by COVID-19, including areas in the North East. Evidence suggests that through a recession the need for social and affordable homes increases and those that rent a social home and/or are on a low income are affected the most. We are also looking at the most appropriate ways of providing support to those impacted over the last year.
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