There are four housing associations in the United Kingdom. Each housing association has district challenges. I have selected two associations to make comparisons. The first association is L & Q (London and Quadrant) and the second one is Green square. The two associations have different risks that influence their performance. Some of the risks can be identified easily as compared to others. This paper will focus on the dangers and their rates. The final section of the article will be an outline of a proper high-appetite.
Greensquare and L& Q associations have their particular risks. Some of the challenges can be a threat to the associations. Greensquare association relies on state regulations and legislation. The changes in the legislation or regulations influence the association. The changes affect the plans, development costs, decrease the scheme affordability, and tax controls (Fraser, Simkins, & Narvaez, 2015). The primary challenge of Greensquare association is losing the essential employees and positions. The association can face the risks in case they have inadequate funds. It is vital to have highly qualified employees to formulate the business plans successfully (Fraser, Simkins, & Narvaez, 2015). The highly qualified employees are essential for the company’s success.
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London and Quadrant association face challenges that affect their efficiency. The association encounters risks on stability in the rental jurisdiction. London and Quadrant have a stable rental agreement with Shelter association. The association faces challenges in increasing their rental control for the available social residences. The changes in rent control would result in a decrease in development appetite. The other risk for London and Quadrant association is the expected inflation of real estate costs. The returns from their exclusive sales and rental income can assist in reducing the effects of the inflated land expenses. The association has a model that facilitates its adaptation in the weaving industry. The risks will still influence the operations of the association in spite of incorporating the strategies. For example, unplanned events can occur such as floods, earthquakes, or economic depression which can influence the cost of land.
Low risks are related to lower returns. On the contrary, high risks are related to higher returns. The businessmen who encounter high risks receive higher returns on their investments. Entrepreneurs who face low risks acquire lower returns on investments (Bromiley et al., 2015). In the business industry, all the risks are equivalent to the returns. The risk-return contract focuses on the compensation that an investor receives after making investment choices. The risk-return payment also focuses on the risks and returns of the investor (Kaplan & Mikes, 2012). I assessed the risk-return tradeoff of Greensquare and L& Q associations. Fraser, Simkins, Narvaez (2015) claim that various factors should be taken into account. The factors include:
The rate of constructing houses is 40%
The rates of home ownership are low for approximately 20 years due to inadequate financing from the banks
The finances of welfare expenses amount to £10 billion and the expenses of the pipeline are £ 10 billion
The houses are constructed at a lower rate where almost half of the population is not housed
The factors portray the challenges that the housing associations face. Greensquare and L& Q associations face high risks which increase their returns. The potential challenges of the two associations are high. The two housing associations have similar charitable goals. The external elements such as emergencies, housing industry, and government expenses are a threat to the survival of the two housing associations (Fraser, Simkins, & Narvaez, 2015) . The changes in the environment influence the future operations of Greensquare and L&Q.
The financial strength and charity purpose for the two housing associations have high risk. London and Quadrant association have a higher risk appetite than Greensquare because they have many houses. There are many families in the houses, and the changes can influence the association. The United Kingdom government has made large-scale investments in the London and Quadrant association (Fraser, Simkins, & Narvaez, 2015) .
The suitable plan for Greensquare and L& Q is to enlarge the affordable rental industry to attract more residents. The associations can use foreign capital and grants to finance their activities. The two housing associations can use cross-subsidy to facilitate their sustainability in the market. In my opinion, the actions are appropriate for the associations because the solutions are aggressive and realistic. The actions can assist the housing associations to overcome the socioeconomic challenges that can occur. The solutions can be useful in resolving the difficulties influenced by external factors. As a result, the associations will meet their goals in the market.
Greensquare and L& Q housing associations have specific risks. The associations have risk-return tradeoffs. I realized that the two housing associations have a high-risk appetite. The risk appetite for London and Quadrant is higher than that of Greensquare. I outlined an action plan to reduce the challenges affecting the performance of the two associations. It is essential for the associations to take into account all the solutions to the risks. The association should manage risks by carrying out a proper analysis of their current situation.
References
Bromiley, P., McShane, M., Nair, A., & Rustambekov, E. (2015). Enterprise risk management: Review, critique, and research directions. Long range planning , 48 (4), 265-276.
Fraser, J., Simkins, B. J., & Narvaez, K. (2015). The housing association case study of ERM in a changing marketplace. Implementing enterprise risk management: Case studies and best practice (pp. 119-141). Hoboken, NJ: Wiley.
Kaplan, R. S., & Mikes, A. (2012). Managing risks: a new framework. Harvard Business Review , 90 (6), 48-60.
