Main risks and mitigating factors
In 2014, Bouwinvest recognised the following management risks:
- Relative performance
- Management fee
The continuity risk is the risk relating to the continuity of the management organisation, as a result of which the company can no longer meet the terms of its agreements with bpfBOUW and other clients. This risk is mitigated by closing service level agreements with outsourcing partners, by drawing up and updating/maintaining a business continuity plan and the application of an information security policy.
The quality risk is the risk that the management organisation is unable to deliver sufficient quality, as a result of which Bouwinvest is unable to meet the terms of its agreements with bpfBOUW and other investors in an adequate fashion. This risk is mitigated through the use of an internal (process) management framework in accordance with ISAE 3402, which is tested annually by an external auditor. In addition to this, a Corporate Social Responsibility action list is monitored and a business incidents procedure is in place.
This risk pertains to the extent to which the management organisation fails to achieve the relevant benchmarking with the entities it manages, as a result of which bpfBOUW and other clients may decide to withdraw their assignments from Bouwinvest. This risk is mitigated by monitoring Bouwinvest’s own performance vis-à-vis the relevant benchmarking on the basis of quality (IPD Property Index, INREV Fund Index and NCREIF Fund Index) and annually (ANREV Index) and by management of (the results of) the managed entities.
The transparency risk is the risk that the management organisation is unable to account for its activities in accordance with the timely reporting and quality requirements laid down in the Service Level Agreements closed with bpfBOUW and other clients. This risk is mitigated by actively managing the process with a view to the timely delivery of high-quality reports.
This describes the risk that Bouwinvest’s fee income is lower than its expenses. This risk is mitigated by identifying fee income developments in a timely fashion and if necessary responding to same with cost-control measures.