IRM quick guide
cuts down complexity
20 January 2017
Who enjoys trawling through reams and reams of guidance documents?
I have recently advised the trustees of a smaller scheme on how to implement an Integrated Risk Management (IRM) framework using the Regulator’s new four page quick guide as an agenda, and it really helped them see the wood from the trees.
When the Regulator’s full IRM guidance was released over a year ago, I locked myself in a darkened room to review it and found it contained lots of useful pointers on the techniques that trustees can use to better manage risk.
However, at 46 pages long it can be quite time consuming for trustees to work through it themselves. This may not be an issue for larger schemes with sizable fee budgets who can rely on advisers for the heavy lifting, but what about schemes without such enviable resources?
The quick guide distils the key points from the wider guidance in a concise manner by:
- Defining IRM and setting out its benefits
- Providing guidance on how to adapt an approach
- Illustrating a suggested five step process to implement an IRM framework and
- Setting out a couple of case studies to give context
For trustees of smaller schemes who are still figuring out how to implement an integrated approach to risk management, the quick guide can be a really good place to start.
In the case mentioned above, the trustees have been able to do most of the work on the downside covenant scenarios themselves, with only light touch support from LCP. They were easily able to compare the earnings and cash flow impact of those scenarios to some simple funding and investment ‘what ifs’ on LCP Visualise. The result is that they better understand the risk capacity of the employer covenant, and have set an appropriate investment and funding strategy based on this, in a cost-effective manner.
Discover how LCP can help you to develop an effective integrated risk management framework to meet your objectives here.