Apply critical thinking. Include a minimum of one quality SPC online library source to support your ideas as well as your textbook. Do not copy the questions. Use short headings to identify the topic of the question. Formal writing and all APA formats are required. Answer the questions in no more than 3 pages not including title page, and reference page.

QUESTION

Chapter 8 – Housing Association Case Study of ERM in a Changing Marketplace (Pages 119-142).

The association data in chapter 8 was created in 2013, from real cases. It may help to investigate the associations selected online for updated information.

You can find these same associations using an internet search engine (Google, Microsoft Edge, Bing, etc…) and search each for additional information.

Select two housing associations covered in Chapter 8. For each of the two housing associations selected please answer the following questions.

1. In your assessment, what are the biggest risks facing each association Note that “for profit” activities such as building houses for sale can also be subject to risk.
2. Considering the list of products in the “Background” section (page 119-120), how do you rate their potential risks and returns for each association? The rating should consider how they stack up against the association’s charitable aims, viability constraints, and association’s operating environment.
3. In the light of the association’s financial position and its charitable aims, how high should be the risk appetite of the association? Is one of the generic strategies listed in the “Sector Issues” section (pages 120-122) appropriate for the association, and if not, then what is the association’s strategy?

Details

• Apply critical thinking.
• Include a minimum of one quality SPC online library source to support your ideas as well as your textbook.
• Do not copy the questions. Use short headings to identify the topic of the question.
• Formal writing and all APA formats are required. Answer the questions in no more than 3 pages not including title page, and reference page.

• ANSWER

•  Housing Association Risk Assessment and Strategy Analysis

  Introduction

  In this essay, we will assess the biggest risks facing two housing associations covered in Chapter 8 of the textbook. We will also evaluate the potential risks and returns of the associations’ product offerings, considering their charitable aims, viability constraints, and operating environment. Additionally, we will discuss the appropriate level of risk appetite for each association, and determine if one of the generic strategies mentioned in the textbook is suitable or if an alternative strategy should be pursued.

  Housing Association A

   Biggest Risks

  Regulatory Compliance: Changes in regulations regarding housing standards, tenant rights, or government funding can pose significant risks to the association’s operations and financial stability.

   Economic Factors: Fluctuations in interest rates, property prices, and overall economic conditions can impact the association’s ability to generate revenue and maintain affordable housing options.

  Reputation and Public Perception: Negative publicity, customer dissatisfaction, or issues related to tenant management and support can harm the association’s reputation and undermine public trust.

   Financial Sustainability: The association’s ability to secure adequate funding, manage expenses, and generate income streams while maintaining affordable housing is a crucial risk factor.

   Environmental Sustainability: Risks related to climate change, energy efficiency, and sustainability practices can impact the association’s long-term viability and operational costs.

   Evaluation of Product Offerings

  Affordable Rental Housing: This product aligns with the association’s charitable aims and addresses housing affordability challenges. It carries moderate risks, primarily associated with government funding fluctuations and regulatory compliance.

   Shared Ownership Scheme: While this product offers potential returns through home sales, it also involves risks associated with property market fluctuations and buyer defaults. However, it supports the association’s charitable aims and can contribute to financial sustainability.

   Risk Appetite and Strategy

  Considering the association’s financial position and charitable aims, it is crucial to maintain a moderate risk appetite. The association should prioritize financial sustainability and long-term viability while adhering to its charitable objectives. One of the generic strategies listed in the textbook, such as a focus on affordable rental housing and diversifying income sources through partnerships and grants, would be appropriate for this association. This strategy allows the association to address housing affordability needs while mitigating risks associated with for-profit activities.

  Housing Association B

   Biggest Risks

  Political and Legislative Changes: Shifting government policies, legislative reforms, or funding cuts can significantly impact the association’s operations, particularly if it heavily relies on government support (Joskow 1997).

   Social Housing Demand: Changes in demand for social housing and evolving demographics can pose risks to the association’s financial stability and ability to meet evolving community needs.

  Asset Management: Risks associated with property maintenance, repairs, and the depreciation of assets can impact the association’s financial sustainability and the quality of housing provided.

   Financial Viability: The association’s ability to generate sufficient income, manage expenses, and maintain reserves is crucial to ensure long-term financial viability.

  Competition and Market Dynamics: Competing housing providers and market conditions can affect the association’s ability to attract tenants, secure funding, and achieve its charitable aims.

  Evaluation of Product Offerings

   Community Development Initiatives: These products, such as offering community centers, youth programs, or employment support, carry moderate risks but can generate positive social outcomes aligned with the association’s charitable aims (Di Domenico et al., 2010).

   Property Sales: Engaging in for-profit activities like building houses for sale carries higher risks, including market volatility, construction cost overruns, and potential reputational risks. However, it can generate higher returns to support the association’s charitable activities.

   Risk Appetite and Strategy

  Considering the association’s financial position and charitable aims, a conservative risk appetite would be appropriate. The association should prioritize long-term financial viability, maintain a strong asset base, and focus on providing affordable housing to its target population (Rittenberg et al., 2012). The generic strategy of collaborating with local authorities, non-profit organizations, and private developers to maximize social impact and financial sustainability would be suitable for this association. By leveraging partnerships and focusing on core competencies, the association can mitigate risks associated with property sales and ensure a stable funding base.

  Conclusion

  In conclusion, both housing associations face various risks, including regulatory compliance, economic factors, reputation, financial sustainability, and environmental concerns. Evaluating their product offerings in relation to their charitable aims, viability constraints, and operating environment is crucial to assessing their potential risks and returns. The risk appetite of each association should be determined based on their financial position and charitable objectives. Adopting a suitable generic strategy or developing an alternative strategy aligned with their unique circumstances will help these associations navigate the changing marketplace and continue to serve their communities effectively.

  References

  Di Domenico, M., Haugh, H., & Tracey, P. (2010). Social bricolage: Theorizing social value creation in social enterprises. Entrepreneurship theory and practice, 34(4), 681-703.https://journals.sagepub.com/doi/pdf/10.1111/j.1540-6520.2010.00370.x 

  Joskow, P. L. (1997). Restructuring, competition and regulatory reform in the US electricity sector. Journal of Economic perspectives, 11(3), 119-138.https://www.aeaweb.org/articles?id=10.1257/jep.11.3.119 

  Rittenberg, L., Martens, F., & Committee of Sponsoring Organizations of the Treadway Commission. (2012). Enterprise risk management: understanding and communicating risk appetite.https://egrove.olemiss.edu/cgi/viewcontent.cgi?article=1753&context=aicpa_assoc