SNPS identified dozens of financial and non-financial risks, the most important of which are explained below.
The pension contributions are invested individually by SNPS at the risk and expense of the (former) participant and the pensioners. The main risk for the participant is the investment risk. This is the risk of temporary or permanent loss of value for the participant as a result of the risks inherent to investing (such as the market risk and the interest risk) becoming a reality. In other words, return is the reward for taking risk. In the investment policy risks are therefore inevitable, but they should be taken scrupulously. This is one of the board’s investment convictions.
"An important management measure for investment risk is investing according to a Life Cycle profile"
An important investment risk control measure is investing according to a Life Cycle profile, which allows for taking more risk at a younger age and aiming for more stability at a later age. Adequate control of the Life Cycle structure is of great importance here. This control is translated into the Life Cycle portfolios. Major adjustments to the Life Cycle portfolios are only made on the basis of an Asset Liability Management (ALM) study. Prior to such a study, the board determines the risk appetite. Within this risk appetite, the board aims for the highest possible expected pension outcome at the lowest possible cost.
In addition, the investment risk is adjusted if necessary, because:
The Life Cycle portfolios and the two administrative CVP portfolios are diversified, for example, across multiple investment categories, countries, sectors and companies to reduce the market risk.
A number of the financial risks are described in more detail in the notes to the financial statements. See the browsable version on page 99.