Staying clear of the cliff edge – do you have a plan?

Eddie Magowan recently joined CT’s Ireland team as Senior Associate Consultant, leading on our finance and risk work throughout Ireland.
Find out more about his experience here.

Here, he discusses how to strengthen financial leadership in your organisation.

Board members of Approved Housing Bodies in Ireland and Housing Associations in NI should be familiar with their various obligations in respect of financial stewardship. These include:

a. “..[to] be financially viable and have adequate resources to meet short, medium and long-term business and financial commitments” [Housing Agency Regulation Office – Financial Standard (Oct 2019)]
b. “[to ensure] the financial strength, solvency and good performance of the Association” [NI Housing Association Guide]

In the Governance and Financial Viability Standard Code of Practice published by the English regulator of social housing, examples are provided of “unacceptable outcomes” in this respect, which all social housing providers across these islands would clearly wish to avoid:

• A loss of social housing assets and/or tenants losing their home (or the benefits of being within a regulated sector) due to lenders or others enforcing their security, or insolvency, or

• A loss of social housing assets where the sale of those assets is the result of poor business planning …or where the reason for the sale is to make good an unplanned cash shortfall

Golden rules

Campbell Tickell has previously set out the merits of devising and applying a series of ‘golden rules’ in board reports, to alert management if and when the organisation strays close to a pre-set boundary, beyond which it risks damage to one or more key determinants of financial health.

The ‘cliff edge’ beyond this boundary might be a potential breach of one or more loan covenants, or the depletion of cash reserves beyond a minimum necessary to meet future commitments. The boundary can also be thought of as articulating the board’s financial risk appetite, since it can be located as close to, or as far away from, the cliff-edge as the body corporate feels comfortable with.

Stress testing

Proximity to the ‘golden rules’ boundary can be highlighted in various ways, but stress testing of financial models is gaining increased acceptance – particularly amongst regulators and investors – as a means of ensuring that boards have given due consideration to the danger of straying ‘too close to the edge’ with their business plans.

By subjecting models to a number of worse case scenarios, stress testing can help to identify the ‘perfect storm’ that could bring the organisation to its knees.

Boards who can show that they are alive to such risk(s) – no matter how remote – and have both a process to regularly test where they stand as the organisation and the external environment evolves and a mitigation plan to deal with the perfect storm if and when it should come to pass, are more likely to meet the rising expectations of regulators and investors.

Mitigation planning

Financial modelling and stress testing alone will not protect an organisation from a perfect storm. A mitigation plan that can be quickly swung into action to address an impending financial crisis is every bit as valuable as a business continuity plan designed to deal with a major incident. While it can be tailored to an organisation’s particular circumstances it should address the scale of the crisis that might ensue.

Typical mitigations might include: delaying/ceasing development; reducing discretionary revenue expenditure; or selling assets. The plan needs to be granular, if it is to be credible and achievable. At minimum it should identify the what/who/when of individual mitigations and can be set out in the form of an escalating series of actions to address various degrees of risk crystallisation.

As with a business continuity plan it must be subject to regular review to ensure that it keeps pace with ever evolving internal and external environments.


For an informal conversation about how Campbell Tickell can support your organisation with the above, contact Eddie Magowan on:

Find out more:


Campbell Tickell is an established multi-disciplinary management and recruitment consultancy, operating across the UK and Ireland, focusing on the housing, social care, local government, sport, leisure, charity and voluntary sectors.

We are a values-based business and firmly place the positioning of our support and challenge on helping organisations to attain change that is well thought through, planned and sustainable. At CT, we want to help organisations create the landscape within which we ourselves would like to exist: fair, inclusive, diverse, engaged and transparent. We build from our values in how we approach all our work as a practice.

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Staying clear of the cliff edge – do you have a plan?

Eddie Magowan, Senior Associate Consultant at Campbell Tickell, discusses how to strengthen financial leadership in your organisation.

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