Issue - meetings

Chris Norton, Strategy and Commissioning Manager (Treasury, Pension, Audit & Risk) presented this report which provided an update on the risks to the Fund and actions taken to manage them.  Further actions relating to risks in the register were housed either within the Business Plan’s Single Action Plan, or business as usual activities.  A draft risk appetite classification was included in the report and it was noted that a risk workshop in June/July would provide training to support the establishment of a risk appetite going forward.

Members discussed the format and content of the register, in particular seeking clarification on the expectations of the Sub-Committee in terms of setting the risk appetite, and the benefits of a single risk register.  Members welcomed the inclusion of cyber security.

Chris Norton confirmed that further discussion was planned on the risk appetite including a workshop for Members.  He also noted that the risk register had previously been separated into Covid Risks and General Risks but it had been agreed that it was strategically more beneficial to have a single register.  The register was also presented to Staff and Pensions Committee and he recommended that the current holistic approach was retained over a compartmentalisation of the fund’s business.

The Sub-Committee’s independent advisors also offered some guidance on risk appetite, noting that the planned session would provide an opportunity to explore risk management in a strategic sense and provide challenge on the relative importance of risks and narrow the focus on more sensitive risks, for example, in relation to inflation, longevity of investments, or cyber security and other key operational matters.

In response to a question from Councillor Kettle regarding the impact of Brexit, Victoria Moffett advised that the risks were low due to the low exposure to UK equity funds and how they were constituted.  Philip Pearson (Hymans Robertson) advised that the Fund was somewhat overweight to UK equity relative to global markets, and whilst over the years the allocation to UK equity had been reduced and was set to continue to reduce, further changes would be subject to the outcome of the strategy review that would lead into the following year’s valuation.  He expressed the view that the known risks of Brexit were reflected in asset prices which were reflected in the long term returns expected from UK equities.  This was reviewed quarterly and a further two to three reviews would be undertaken before the new strategy was approved.  It was noted that more discussion of risk factors would take place over the coming months as part of the investment strategy review.

Resolved

1.     That the Pension Fund Investment Sub Committee noted the risk register attached to the report at Appendix B.

2.     That the Pension Fund Investment Sub Committee noted the Risk Appetite statement attached to the report at Appendix A.