Integrated Risk Management Framework SSPF
SSPF ensures that its business operations are conducted in a controlled and ethical manner, and in that context is responsible for the management of the risks. SSPF has set up an integrated risk management control framework, the guiding principle of which is to have a control structure that fits the profile of SSPF and the risks that SSPF faces. The framework helps the board to structurally identify risks from within the long-term objectives of SSPF and with due consideration of the internal and external environment, and to set up a control structure accordingly. Within this framework, risks and control measures are identified, the impact and likelihood of these risks are determined, and actions are defined to mitigate the risks to the desired level. SSPF assesses the (development of the) risks every quarter, or more often if (market) conditions so warrant, and takes appropriate measures.
The integrated risk management control framework of SSPF is based on a continuum. This means that the control measures that apply within the administrative bodies of SPN, Achmea Pensioenservices and SAMCo are taken as a starting point for the design of the SSPF management organisation. By building on the internal controls of these organisations, properly understanding these control measures, having them independently validated where necessary and actively monitoring them, the SSPF management organisation is set up effectively.
To manage risks as well as possible, it is essential to consider them in their mutually interdependent context. The policy of SSPF is aimed at managing risks in such a way that there is a careful, responsible and balanced weighing up between the risks on the one hand and, on the other, the returns, stability in the premiums, chance of additional payment, efficiency in administration and costs. The Board emphasises that some risks can manifest themselves differently than estimated and/or expected beforehand, for example as a result of demographic changes, risks of wage inflation and developments on the financial markets.
Embedding sustainability risks in investment decision-making procedures
An important part of SSPF's investment policy is the management of investment risks. SSPF reduces investment risks primarily by ensuring a healthy diversification of investments across - and within - the various investment categories.
Within the context of Socially Responsible Investment, SSPF also has policies for embedding sustainability risks in its investment decision-making procedures. In this context, a sustainability risk is defined an event or circumstance at environmental, social or governance level that, if it does occur, might have an actual or potentially material adverse impact on the value of the investment.
It is therefore of paramount importance that SSPF applies procedures to minimise ESG risks, which include sustainability risks. These risks are (partially or completely) mitigated by:
- Periodically assessing the SSPF portfolio for these (potential) risks.
- Taking ESG factors into account as an important part of the manager selection process.
- Monitoring the activities of SSPF as an ‘engaged shareholder’ in terms of exercising voting rights, engaging in dialogue and exclusion as possible ultimate consequence.
The asset manager of SSPF, SAMCo, has drawn up guidelines with regard to integrating sustainability risks into its investment processes. The implementation of these guidelines is periodically reviewed by SSPF.
Would you like to learn more about the guidelines of SAMCo? Read more about SAMCo (pdf).