Risk Management

PSP Investments acknowledges that in order to achieve our legislated mandate, we must take risks and manage them appropriately. For this reason, we have established an integrated approach to managing a full spectrum of risks.

Risk Appetite

PSP Investments' Risk Appetite Statement (RAS) was developed by management and the special Risk Committee of the Board of Directors. Reviewed annually, the RAS formalizes and combines the key elements of risk management at PSP Investments and clearly defines the Government’s assumed appetite for risk. It outlines the appetite, attitude and tolerances to risk of the Board of Directors and management, the role of the Board versus management as well as PSP Investments’ risk governance structure.

The Risk Appetite Overview (RAO) provides a summary of the RAS and is available for download in the box on the right-hand side of this page.

Enterprise Risk Management Policy

PSP Investments’ Enterprise Risk Management Policy provides a framework for identifying, evaluating, managing, mitigating, monitoring and reporting our various investment and non-investment risks. The ERM Policy also defines and categorizes enterprise risks to facilitate a universal understanding of all the risks faced by PSP Investments.

Enterprise Risk Categories:

PSP Investments' enterprise risk categories are illustrated below:

Enterprise Risk Management Framework

Risk Management Governance

Sound internal governance forms the foundation of an effective risk management framework. To help ensure appropriate accountability for enterprise risk management, PSP Investments’ risk management policies incorporate three lines of defence:

  • First line of defence - Business units and corporate services.
  • Second line of defence - Risk management, compliance and other functions (ie, legal, finance and administration).
  • Third line of defence - Internal audit.

Risk Culture

Given that the Corporation faces risks in all aspects of its activities, PSP Investments promotes a corporate-wide risk-aware culture and strives for a universal understanding of key risks inherent to our activities. Senior management and employees are not only active participants in risk identification, but also in risk identification, evaluation, management, monitoring and reporting.

Board of Directors Oversight

The Board of Directors establishes its risk oversight by:

  • Establishing the RAS, investment objectives, the SIP&P and the Policy Portfolio
  • Participating in the definition of PSP Investments’ risk philosophy
  • Ensuring that PSP Investments’ management has established effective enterprise risk management within the Corporation
  • Being apprised of material risks and how PSP Investments’ management is responding to them.

In order to oversee and manage risks related to its investments and operations, senior management relies on various committees.