Our starting point is to make sure the scheme’s risk register is fit for purpose. For many schemes, this will mean moving away from a large “tick box” risk register to a more focused and streamlined approach, under which the register only deals with a small number of key risks. This re-design process is critical if the register is to become the main roots of a scheme’s governance.
The process of re-designing the register, if done well, will create a healthy debate amongst key stakeholders and an honest appraisal of any newly identified risks. In our experience, trustees are always surprised by how many areas for improvement are identified and subsequently actioned as part of this process.
The trustees of a £4 billion scheme asked us to carry out a root and branch review of their governance. The scheme has both DB and DC sections, with a number of trustee sub-committees. The trustees had already identified two concerns:
- was their risk register still fit for purpose?
- how best to discuss risks as a trustee group, when many of the day-to-day decisions were taken at sub-committee level?
We worked with the pensions team and a sub-group of the trustees to update and streamline the risk register. We then provided the trustees with a bespoke online risk register, so the trustees could review and comment on specific risks in the run up to meetings (as well as use the risk register live in meetings).
By having a smaller number of main risks which the trustees had debated and “bought into”, the risk register more naturally became part of regular trustee meetings. To help this development, trustee meetings were arranged so that agenda items were directly linked to the relevant risks from the new, streamlined risk register. This meant that, whatever the topic under discussion, any decision took into account the impact on the associated risks.
Via the online tool, specific risks on the risk register were allocated to the trustee sub-committees, so those groups could consider their areas of risk when meeting as a committee.
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