Risk

Housing Australia’s Risk Management Governance Framework

Risk governance

The Board is responsible for defining Housing Australia’s risk appetite and establishing an appropriate risk management framework.

The Board, with the assistance of the Audit and Risk Committee, has developed a Risk Management Framework which sets out the core principles and the types of risks that Housing Australia faces. This forms the basis on which a Risk Appetite Statement and Risk Control Matrix have been established. 

The Board relies on the Executive to manage the implementation and embedding of Housing Australia's risk appetite into Housing Australia’s activities, monitor performance and report as appropriate to the Audit and Risk Committee and/or the Board.

Risk culture

Housing Australia’s risk culture and core principles guide everyday behaviour in the organisation.

Housing Australia strives to:

• Maintain the highest professional and ethical standards
• Align any staff incentives and rewards to encourage behaviour consistent with its risk appetite
• Provide an environment where employees are empowered to the full extent of their abilities and that fosters innovation and learning within business practices
• Monitor, stress test and re-evaluate risk ensuring management information systems and risk reporting accurately reflect the underlying risk
• Only provide facilities after carefully and appropriately considering the risk implications
• Be intolerant of regulatory and compliance breaches.

Risk appetite

Risk appetite is a fundamental part of both risk and capital management. Housing Australia guides itself in fulfilling this obligation by setting its own standards for capital adequacy, drawing upon the experiences of domestic and international non-bank lenders, such as the Housing Finance Corporation in the UK.

The Board’s Risk Appetite Statement sets the boundaries for the risks that Housing Australia may accept to achieve its objectives within risk policies, risk tolerances and operational limits set by the Housing Australia Act, Investment Mandate, PGPA Act and the Board.

Housing Australia's risk appetite represents the types and degree of risk that it is willing to accept for its stakeholders in its strategic and business actions.

Housing Australia’s risk appetite is:

• Dynamic. The Board will review its Risk Appetite Statement on a regular basis in conjunction with its Corporate Plan and relevant Government policy (such as the Investment Mandate).
• Defined. It requires Housing Australia to operate within its defined tolerances and governance procedures.
• Encompassing. It provides a roadmap that guides its internal risk culture and sets boundaries defined by principles and metrics (both quantitative and qualitative) which are considered collectively.
• Judgement based. It recognises that articulating risk appetite is a complex process balancing many different views, but ultimately is a question of judgement.

Risk control and measurement

Housing Australia management undertakes regular risk reviews to ensure that our strategic and operational activities align with the Board’s appetite for risk. Housing Australia follows established risk review procedures to ensure that we have a consistent view of the risks we face.  Information on significant risks, collected through this process, is reviewed by senior management prior to being reported to the Board and Audit and Risk Committee (through the regular provision of the risk dashboard and RCM). 

Risks are classified depending on their nature. Housing Australia’s key risks fall into the following risk categories (as described further in the table below): reputation, strategic, credit, investment and earnings, funding, liquidity and liability, operational, regulatory and compliance, fraud and corruption, and culture and people.