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Integrated Risk Management

Minimising risk through a structured process

Fulfilling your Obligation

Trustees of defined benefit schemes have an obligation, under the guidance of The Pensions Regulator, to examine the interaction between three component risks:

™  Employer covenant  ™  Investment   ™  Funding

The objective of an integrated risk management program is to manage and mitigate the risks inherent in defined benefit schemes.

Our experienced and qualified team can take a close look at how each of these components align, prior to recommending an Integrated Risk Management framework and implementing any potential contingency plans that may need to be established.

The benefits of our advice include:

  • Clarity of risk
  • Improved and informed decision making
  • Open channel of communication regarding your and the employer’s risks against each others’ strategies and aims
  • Niche focus on primary risks
  • Better contingency should problems arise
  • Improved use of time and resources
  • Better value overall

We have an established 5-step framework (built into the existing governance framework) which can be accommodated by most schemes:

 Step 1: Planning :

  • Determine the scheme and employer’s objectives
  • Agree a relevant proportionate approach

 Step 2: Risk Identification and Assessment :

  • Identify funding, investment and covenant risks
  • Assess the impact and interaction between each risk
  • Assess the employer’s ability to support the scheme and capacity of risk in comparison to that of the trustees

 Step 3: Risk Management and Contingency Planning :

  • Assess the current position and determine whether the employer and trustees are comfortable or whether changes are required
  • Understand how the employer covenant may impact on the investment and funding strategies, and develop contingency plans should strategies need to be revised

Step 4: Document the Framework and Decisions :

  • We bring clarity and assist with ongoing monitoring and core efficient decision making, with a focus on the main decision points

Step 5: Cyclical Risk Monitoring

  • The framework doesn’t finish at this point! High level monitoring is carried out at least twice a year to periodically reappraise, respond quickly to emerging risks, and implement further action plans
Nigel Jones

Nigel Jones

Director, Head of Consulting & Actuarial Tel: +44 (0)161 236 1330

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