Building Risk Resilience for the Long Term
In 2024 and beyond, we continue to witness a dynamic and unpredictable global landscape, characterized by geopolitical tensions, the ongoing remake of global trading systems, rapid technological advancements and challenges in forecasting economic growth, deficits or inflation. In this context, uncertainty remains a constant challenge.
Risk management aims to understand uncertainty through the estimation of outcomes and probabilities, which is critical to delivering persistent, superior risk-adjusted returns over the long term to our clients.
AIMCo is committed to understanding our risks and proactively building risk resilience to help maneuver through uncertainty.
We do this by:
» Leveraging and evolving our adaptable Enterprise Risk Management Framework
» Embedding robust risk management strategies into our investment and corporate practices
» Assessing top risks on an ongoing basis
» Integrating risk management into the strategic planning process
» Providing appropriate board and executive risk oversight
» Setting the “tone from the top” on the importance of risk management across all activities
» Understanding client investment objectives, risk appetites and strategic plans
» Promoting a risk-conscious culture
2024 Key Initiatives
» Refreshed the Enterprise Risk Management Framework
» Updated our Market & Credit Risk Management Policy and implemented revisions to Product Risk Mandates (measures and limits) for products being updated
» Enhanced risk reporting for clients as well as AIMCo’s risk monitoring and management to incorporate granular risk metrics and improved exposure drilldown capabilities
» Further improved stress testing capabilities, particularly for credit, liquidity and leverage exposures under stressed scenarios
» Conducted thematic scenario analysis and stress testing for several global events to help guide investment and risk management decisions
» Provided compliance assurance for clients and continued to engage clients on their investment risk appetite and tolerance
» Reviewed and enhanced external fund manager operational due diligence practices to further mature AIMCo’s Third Party Risk Management program
Key risks we monitor and manage
Investment Risk
Risk that an investment fails to achieve its risk-adjusted objective
» Independently assess and measure, from both top-down and bottom-up perspectives, the risks being taken and challenge accordingly within a well defined governance structure
» Seek to ensure investment products have a risk/return profile consistent with their product descriptions
Liquidity Risk
Risk resulting from having to settle payment obligations as they come due
» Seek to ensure a supply of high-quality liquid assets and diverse funding sources to meet potential liquidity demands in a stressed environment and over multiple time horizons
» Stress test various scenarios to assess resiliency in a liquidity crisis; independently measure and monitor liquidity risk at the client level
Information Security Risk
Risk arising from unauthorized access, misuse, disclosure, disruption, modification, or destruction of information and/or information systems
» Maintain a dedicated team of cyber security professionals
» Continue to invest in a cyber resilience posture that is commensurate with the increased sophistication of threats
Corporate Execution Risk
Risk resulting from the failure to effectively implement strategic organizational and transformational initiatives or absorb change
» Effective planning, resource allocation, implementation and monitoring of strategic initiatives and transformational programs
» Establish robust governance structure to oversee strategic initiatives and transformational programs
» Maintain effective change communication that is clear, proactive and provides consistent messaging
» Continuously evaluate progress to ensure the change process stays on track and enable timely intervention, remediation and/or recalibration, as needed
People & Culture Risk
Risk due to the failure to effectively and appropriately attract, develop, manage and retain a highly engaged and skilled workforce; maintain and demonstrate AIMCo’s core values and expected behaviours
» Modernize our people and culture experience
» Prioritize workloads
» Offer services that support mental health needs
» Develop our people through training and leadership programs
» Monitor engagement and anticipate or respond to trends