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Integrated Risk Management

Integrated risk management (IRM) is not a new concept, but the Pension Regulator’s IRM Guidance makes it something all trustees and sponsors of defined benefit pension schemes now need to take seriously. This can be an opportunity to streamline scheme management and improve member outcomes by better understanding and controlling your risks.

If you get it right, a well-run scheme will cost less to operate and take up less management time. Get it wrong and the time, cost and reputation risk can be significant. So how do you make sure you are doing enough without going too far? And would you feel comfortable explaining what you do to the Regulator?

Appropriate and proportional

The Regulator is keen to remind schemes that integrated risk management, and good governance more broadly, does not mean more bureaucracy.

A robust yet proportionate approach allows you to make the best use of limited resources. You need to understand which risks could cause the most damage, agree the best way to mitigate them and have a contingency plan should things go wrong.

That may sound complex, but a high-level assessment of the reliance on covenant, together with the risks posed by the funding and investment strategy, will quickly identify the key issues. Taking this approach will then allow you to manage the majority of the risks for the least amount of effort.

Kick off your IRM discussions with IRM+

Willis Towers Watson's IRM+ is a unique and cost-effective service designed to help trustees and sponsors undertake a structured review of a scheme's existing arrangements.

Going beyond the risks specified by the Regulator, IRM+ provides a broader perspective on how a scheme is run – in addition to reviewing key risks relating to covenant, funding and investment, there is an assessment of the scheme's operational efficiency and wider governance issues.

IRM+ provides an easy-to-understand, one-page summary that looks at how things work currently and how you would like them to. This 'gap analysis' then provides you with an action plan to help close any gaps.

Sample output from IRM+


visual example of output from IRM

Broad overview of a scheme's activities

broad visualization of a scheme's activities, which includes governance, covenant funding and investment, and operational efficiency

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