1st August 2007

Help on the Horizon for control and risk management

Half of UK Pension Schemes have failed to implement Internal Controls but help is on the horizon.

In The Regulators latest Governance Survey, figures suggest that there is still a great deal of work to be done where control and risk management is concerned.  Only 46% of respondents have taken the time to identify potential risks to their scheme and 51% of respondents had put Internal Controls in place to manage these risks.

Back in November 2006, the Code of Practice covering Internal Controls was issued.  It said that trustees of pension funds were required to ensure that they had adequate Internal Control mechanisms in place to ensure risks were efficiently managed.

It is therefore surprising to read that just under half of schemes have failed to comply with these legislative requirements. 

In February this year, The Regulator issued further guidance and example risk registers to support their ninth code of practice.

To prepare a risk register is a major exercise and to mange and review those risks properly on an ongoing basis is a potential bureaucratic process which could unnecessarily sap pension scheme assets.  However, to ignore this issue or to occasionally scan over a risk register simply marking up a change here or there is potentially even more costly.

 “At eShare, we have worked with three of our key clients to develop a full risk management and control software module called eControls,” said Alister Esam, Managing Director of eShare.  “eControls takes the bureaucracy and paper shuffling out of risk management.  It manages the whole risk review process from end to end and saves everyone time and money.”

With eControls from eShare, risks are rated according to their impact and likelihood, and can be assigned to either an individual or a committee.  Once allocated, eControls looks after the risk and a full audit trail is maintained to each risk review so anyone can view its’ history.  eControls tells everyone what to do and when to do it.  It makes all of this fully transparent to the committees responsible.

“It simplifies the whole process saving time and ensuring nothing is ever forgotten.  All schemes can now manage risk well without needing a big budget.” said Esam

In the Governance Survey, The Regulator clearly states:

“Risk management underpins good scheme governance.”

Schemes therefore need to be acting now to ensure their trustees have the necessary tools to allow them to ensure their potential risks have been identified, that adequate controls have been implemented and that these controls are maintained and reviewed on a regular basis.  Only then can schemes ensure their schemes good governance and demonstrate their compliance to The Regulator.

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