At Motability Operations, we recognise that sound risk management is fundamental to the successful and sustainable operation of the business. Our dynamic, robust approach protects the interests of customers and seeks to make sure risks are managed properly to avoid financial, reputational and operational shocks to the business.
We identify, quantify and manage all material risks. Our risk framework is embedded within our day-to-day activities and our governance framework, which is overseen and managed by our Risk Management Committees.
There is a Director with specific responsibility for risk, as well as a dedicated Risk Management function. The business’s appetite for risk is managed through a comprehensive and independently verified Risk Appetite Framework.
Through our policies, our approach and our activities, we make sure that we meet standards of behaviour that fall within our agreed level of risk appetite.
We have designed our risk management framework around the ‘three lines of defence’ approach to risk governance and have a dedicated Risk function that is integral to co-ordinating, monitoring and advising on control activities.
This holistic approach encompasses all material risks, with clearly identified accountabilities and responsibilities for risk management, control and assurance. As such, risk management is a core part of our business planning and effective capital management.
We regularly review our risk management framework to ensure that it remains appropriate to the business and its strategy. These updates include assessments of risks and controls, the update of risk registers, and early identification of any emerging risks to the achievement of our objectives.
The framework is designed to identify and mitigate risks to the business and its operation, which has been proven during an unprecedented year.
We are now working to ensure our approach remains aligned with the revision to the three lines of defence approach published by the Chartered Institute of Internal Auditors (IIA) in July 2020.
Our risk management approach is supported by the use of a clearly defined Risk Appetite Framework (RAF) within which we have formalised risk reporting to provide effective line of sight to management.
The framework builds on our strong risk management culture and aligns our strategic planning and risk management activities. The RAF captures the business’s risk appetite against all key risk components and leverages our governance culture to provide an alert system against the set appetite levels which now includes over 1,640 risk metrics.
The development of this framework drew on best practice and is subject to periodic internal and external review.
The responsibility for monitoring and review of the RAF has been included within our governance framework.
Our risk appetite is reviewed and set by Directors on at least an annual basis, utilising information from strategic planning, risk management activity and business objectives.
See how we assess ten areas of risk management and put measures in place to stop them affecting our services.
With nearly £8.8bn of vehicle assets on our Balance Sheet, managing their residual value is key to our financial stability and helps us provide a sustainable and affordable proposition for customers.
Relevance to strategy
Since 1 October 2013, we have kept a proportion of insurance premium exposure through our A rate reinsurance captive MO Reinsurance Ltd. The effective management of insurance risk is essential to provide stable prices and affordable mobility to our customers. A strategic decision to move to a new insurance provider, Direct Line Group, was confirmed in FY21.
Relevance to strategy
Our revised insurance arrangement has been carefully designed to make sure the structure delivers value for customers and is sustainable into the long term
The availability of sustainable funding and liquidity is critical to our ongoing operation. Risks include those associated with exposure to interest and exchange rate movements, liquidity, funding, counterparty and operational risk.
Our core product offering is delivered through contracts with key suppliers who provide the vehicles, the vehicle insurance services, roadside assistance, and tyre and windscreen replacement services. The failure of a key supplier would create difficulty for customers and potentially have significant financial implications as we seek alternative service providers.
Risk of default of key income streams and exposure to bad debt
Risk of key systems, controls or processes failing
The loss or harm related to unauthorised access to infrastructure or data.
Business operations are reliant upon people and the systems and activities performed by our employees in conjunction with our key suppliers and partners. p>
Climate change and sustainability are key issues for UK businesses. Losses and/or reputational damage may result as a consequence of climate change.
Loss of highly skilled employees and /or inability to develop, retain or attract skilled employees to support operations and growth activity.
Through our proactive risk-management approach, we engage with all business areas to ensure that risk is efficiently and consistently managed across the business.
Clear values ensure that we deliver our strategy.
Supporting our customers will always be our number one priority.
© Motability Operations Limited 2021
Motability Operations Limited is authorised and regulated by the Financial Conduct Authority under reference number 735390. Please see our Terms and Conditions for more information.