Investment risks rank highest for CalPERS

Investment controls and systems remain the highest risk at CalPERS according to its year-end enterprise risk dashboard.

While an investment office “target operating model” has been developed it has not been fully implemented, which means the risk rating remains at the highest level, with a report stating weak controls, systems and data could lead to inappropriate transactions, financial loss and reputational harm.

According to the report there are a number of planned mitigation strategies for this year that aim to reduce this risk. These include implementing a new equity portfolio construction system and global equity investment book of record; establish an investment office data management function; and the completion of the financial reporting reengineering project.

In September 2010 CalPERS created the Office of Enterprise Risk Management, which has purpose of leading the organisation in the identification, assessment and monitoring of enterprise risks, and for developing a risk-intelligent culture among staff and management.

In its risk assessment plan it has set out the planned risk assessment activities for the rest of the 2011/2012 financial year.

On the investment side these include a Blackrock/Charles River user review, and rules review, as well as a securities lending review.