Risk management must not be “mechanistic” and there is “no magic answer”, Irish Pensions Authority head of supervision and enforcement, Grace Guy, has said.

Speaking at the authority’s Risk Conference earlier this month, Guy set out the Pensions Authority’s views and expectations on risk, including on a scheme’s own risk assessment (ORA), which the authority has since published guidance on.

“Irish pensions are going through a period of unprecedented change and for a lot of us the catalyst for that was the IORP II Directive… A lot of the thinking in IORP II was around following the financial crash and it was catching pensions up with other financial services providers. One of the things it wanted to do was introduce a modern risk-based pension scheme governance approach.”

Touching on the consolidation of Irish pension schemes currently being seen in the country as a result of the new regulations, Guy said: “The pension schemes that are remaining, at the authority it is essential to us that these schemes embed fit for purpose risk management practices. In our view, comprehensive risk management is very new for a lot of Irish schemes.”

She said the authority is engaging with schemes all the time on risk and it has seen people trying to grapple and get their heads around something that is very complicated.

“To be really clear, we expect trustees to give sufficient time and attention to how they approach risk management within their schemes. That’s on the trustees, in terms of responsibility and accountability.

“Risk management cannot be mechanistic, there’s no checklist, there’s no tickbox formula… we want trustees to think about this, we want them to engage with the individual factors of their own schemes.”

On the ORA, Guy said that it is not just about drawing conclusions but it is about taking action.

“We see the ORA as one of the trustee’s most important responsibilities and we think if that is done right, a lot of other things should fall into place. That should work well within the overall governance structure of the scheme.”

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