Can IRM make scheme monitoring and reporting easier, not harder?
October 11, 2017
By Jane Evans
Integrated Risk Management (IRM) – the idea of looking collectively at all the risks that might ultimately prevent a scheme paying out all its member benefits over time – is an excellent concept. It would be crazy to spend a lot of energy solving a particular scheme risk without thinking about what could be happening to the sponsor at the same time, for example.But many trustee boards and companies are already suffering from a degree of information overload – detailed reports on investment and funding, as well as financial or covenant information on the sponsor. Is applying IRM actually an opportunity to have another look at the information the trustees need?
In my experience, what is needed is to prioritise the risks that are most relevant at the given point in the scheme’s journey, recognising that these are also likely to evolve over time. That then frees up the time and energy on both sides, which can otherwise be absorbed disproportionately in sifting and understanding the information on hand.
For me, the key factors are:
- Clarity of purpose – you need to ensure you know what you want to achieve and what would be proportionate to achieve it
- Build on what you’ve got – start from what already exists and refine it
- Fill in the holes – identify where the potential impact on the company and scheme is currently a bit unclear, and work out how deeply you need to explore these
- Focus on actions – the main idea is to work out what all parties would do if certain things happened
- Keep it live – recognise that which risks are most important will evolve over time, and have a plan to evolve with them
Each stakeholder – trustee, sponsor, adviser – has a role to play in getting this right. But it can be so much easier if it can be seen as a potential positive rather than yet another obligation.
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