The risk-capacity of SNPS is largely determined by the risk appetite of its participants. In determining that risk appetite, the board took the objectives of SNPS as its starting point.
The fund distinguishes between financial and non-financial risks. Risks that have a direct impact on the volume of the assets, liabilities and results of the fund come under the financial risks. By way of clarification: Participants’ investments come under the financial risks. Non-financial risks include strategic, administrative operational and/or reputational risks. Every quarter, the board ascertains whether the net risk (the risk remaining after the risk reduction measures taken) still meets the board’s risk appetite.
Gross risk is the risk without taking control measures into account. The aim of taking control measures is reducing the gross risk to an acceptable level. This is the net risk that the fund is still exposed to despite taking all measures. The risk of, for example, a cyberattack without any kind of protective measures is quite high (gross risk). By introducing mitigating ICT measures, the risk is reduced (net risk). Each quarter, the board examines whether the net risk is still within the risk appetite. If this is not the case, additional measures will be taken.
Operating the pension scheme comes with risks. SNPS therefore established a risk management framework that allows the board to map out and control risks, taking the fund’s long-term objectives and the internal and external environment into account.