Risk management
Responsible governance and effective risk management are at the heart of what we do
Första AP-fonden’s mandate to create returns on pension assets means that the Fund is naturally exposed to different risks, both internal and external.
Första AP-fonden’s endeavours to achieve its return target involves risks that we work to identify, evaluate and actively monitor in a systematic and structured manner. The Board of Directors bears overall responsibility for the Fund’s risk management, while the CEO is responsible for the day-to-day implementation of the Fund’s risk policies. Control functions monitor the expediency and effectiveness of risk management.
The Fund’s risk appetite framework defines limits for the amount of risk the Fund should and can take in order to achieve its return targets, and outlines strategies for managing the Fund’s key risks. Our risk management plan complements governance by outlining risk management responsibilities and processes.
Första AP-fonden’s primary risks
We work systematically to identify, measure and manage risks to ensure sustainable and responsible management. Our key risks include financial risk, management risk, strategic risk, operational risk, political risk and reputational risk.
Financial risk
Management risk
Strategic risk
Operational risk
Political risk
Reputational risk
Independent control functions
Första AP-fonden has independent control functions in areas such as risk, compliance, information security and data protection so as to ensure strong internal control. These functions are separate from the operational activities and report directly to the CEO and the Board of Directors. Internal and external auditors also provide independent reviews of the Fund’s risk management and compliance.
Three lines of defence
Risk management at Första AP-fonden follows a model with three lines of defence:
1. First line of defence
All staff members are responsible for identifying and managing risks in their daily work and ensuring that they comply with the Fund’s guidelines.
2. Second line of defence
The independent control functions monitor the Fund’s risk management and verify that it is conducted in accordance with applicable laws and regulations, as well as established policies. They also support the organisation with training and by identifying, assessing and managing new risks.
3. Third line of defence
Internal Audit reviews and evaluates the Fund’s risk management and internal control systems to ensure effectiveness and compliance.
Regular reporting and monitoring
The Board of Directors and the CEO receive regular reports on the evolution of the Fund’s risk profile and exposure. We ensure that the Fund adheres to both internal guidelines and external regulations by means of continuous monitoring. This reporting also includes limit monitoring and audits conducted by the Fund’s independent control functions.
More information about the Fund’s risk management is available in our latest annual report.