SNPS. Smarten up your future
Annual Report 2020 – Shell Nederland Pensioenfonds 
Your pension, your future
Love your future. Shell Pension.

November 2020

Risk management in lines

Risk management system

The risk management system has a first, second and third line of defence. The responsibility for risk management lies with the person who is primarily responsible for the process in question. This is the first line of defence of the fund’s risk management.

As a second line of defence, SNPS set up a risk management process. The Finance Department of Shell Pensioenbureau independently verifies whether the controls to be implemented by the first line have properly been implemented and whether the control measures are effective. To that end, they use the so-called Risk and Control Self-Assessment cycle (RCSA) each quarter. In the RCSA the probability of a threat occurring and its potential impact is determined. The structure, organisation and operation are also periodically evaluated.

Key officer risk management

A knowledgeable and experienced Shell colleague (who is not a member of the board or the accountability body of SNPS, nor involved in the day-to-day operations of the fund) has been appointed by SNPS as ‘key officer risk management’. The Finance Manager of SPN fulfils the key position of risk management and supports the key officer in the execution of the second-line duties. The board is part of the risk management process and determines the outcomes in terms of content-related changes as well as risk classification and risk acceptance.

At least every three years, an Own Risk Assessment (ORA) takes place, in which the structure and functioning of the entire risk management system is evaluated and reported to the board and the De Nederlandsche Bank (Dutch Central Bank - DNB). The assessment was conducted for the first time in 2020 and reported to DNB.

"The RCSA determines how great the chance is that a threat will occur and what the possible impact is."

Internal Audit

The third line of defence is formed by the Internal Audit function for the periodic internal audits at SPN. Since 2020, the board has also appointed a key officer internal audit who sees to it that the audit and assurance process is effectively managed and reports on this to the board. This officer is also an experienced Shell colleague who is not a member of the board or the accountability body, nor involved in the day-to-day operations of SNPS.

The SNPS Control Framework also builds on the controls of executive organisations: Shell Pensioenbureau Nederland, Achmea Pensioenservices and Achmea Investment Management. Each of these organisations has set up their own ‘three lines of defence’ to control the risks for their own organisation.

The diagram below outlines the risk management process of SNPS.

Risk management process

The process provides a control framework appropriate to the profile of SNPS, and the risks the fund is exposed to. Every year, the board evaluates the control framework. In 2020, several improvements were implemented to further tighten risk management and adapt it to changing circumstances. Among other things, the controls for communication risks and controls for the implementation of the own risk assessment (ORA) were updated.

Continuous development

The risk management framework is continuously developing and being adjusted where necessary. In 2020, SNPS conducted an ORA for the first time. In addition, climate risks and the consequences of the statutory interpretation of the Pension Agreement will receive special attention in 2021.