Attending the virtual social housing finance conference today I listened to a very on point session on risks and resilience for housing associations. There are a wide variety of risks and challenges for associations to consider and tackle from market uncertainty, new shared ownership proposals, planning changes, decent homes 2, zero carbon and security valuation risks, overlaid by fiscal challenges and political risk and, whilst some of these risks may seem a way off, I think we have learnt from 2020 that we need to be prepared and ready to expect the unexpected! These are all risks boards should be actively considering and addressing and stress testing. 

The risks around zero carbon are of particular interest as this is a risk that could easily be 'put off' in terms of addressing (not least as technology is still being developed). Matthew Bailes said, that the risks around zero carbon can be seen as a 'betamax risk' in that choosing to invest in the wrong technology could be a risk but, so could waiting and doing nothing for many years until technology is more settled.  Matthew noted that looking at "no regret" or "low regret" options now was a preferable approach to doing nothing and, I am inclined to agree. As well as not having to rush changes at the last minute, starting to address these risks now will spread the expenditure and ease the 'hit' that these costs could have on covenant headroom.

On the topic of covenant headroom for costs such as building safety and zero carbon, we have not yet seen how funders to the sector will approach any potential covenant issues. Will (one-off) carve-outs for these costs be agreed? Another risk to consider...!

If you are attending the social housing conference, do tune into the breakfast briefing on Thursday morning where my colleague, Victoria Jardine, will be interviewing three leading lights from the sector and asking each of them about what, from a governance and organisations perspective we have all learned from COVID-19 and what we will be embedding for the future. Having had a sneak peek of what they are each choosing to focus on, I anticipate it will be a really insightful session.