Integrated Risk Management
The Pensions Regulator states “IRM (Integrated Risk Management) is an important tool for managing the risks associated with scheme funding”. In general, employer covenant, funding and investment decisions interact so that a material change to one can affect the other two.
A proper understanding of the risks a scheme is exposed to and the correlation between them is crucial in formulating a robust plan for funding and investment.
IRM is deeply embedded in our approach to covenant, and we help trustees to understand how the employer covenant underpins investment and funding risks, as well as the correlation of the employer covenant to those risks (e.g. changes in economic circumstances may damage the employer covenant and scheme funding at the same time or vice versa).
We have extensive experience in providing practical advice, considering how different economic scenarios might impact employers, how changes to one element of risk might be counterbalanced elsewhere, and what an appropriate overall risk budget might be.
In addition, we have developed PensionSim, a bespoke simulation that allows trustees and sponsors to experience real life scenarios and their impact on a pension scheme and its sponsor in a safe environment. It is a dynamic, integrated risk management training system that enables a deeper understanding of IRM and how to make holistic integrated decisions that take into account the wide range of factors involved in managing a pension scheme.
“Seeing PensionSim in action has convinced us of its value to trustee boards”.
Director, Independent Trustee Firm
See our innovative approach to IRM: House of IRM series
Please get in touch to find out how we can help you.