Risk-Management Practices at Large Pension Plans: Findings from a Unique 27-Fund Survey

Abstract

This survey-based study looks at the risk-management practices of large pension funds, relying on responses from 27 funds around the world with total assets of US$2.7 trillion. The primary driver for differences in the number of full-time equivalent risk-management staff (risk FTE), which ranged from 3 to 96, is the complexity of the investment program. We explore differences in risk FTE across seven different risk activities and discuss sources of variation between funds. We also look at “new paradigm” risk-management practices, which have become more common among the participating funds, demonstrating that risk management has become much more prominent.

Keywords: Benchmarking, Enterprise Risk Management, Organizational Design, Pension Fund, Risk Management