Risk management: more than the sum of its parts?

2023 will be a year of reckoning for the UK pensions industry.

As a growing number of market participants come under fire in the aftermath of 2022’s liability-driven investment (LDI) crisis, the time for introspection is upon us.

Certainly, the LDI crisis highlighted the need for DB schemes to consider risk in a more holistic manner. To focus purely on quantifiable risks, we believe is not enough— trustees must consider qualitative risks, even if these risks are harder to measure. How else can they reasonably ensure their scheme remains on a secure footing?

Our white paper will demonstrate the limitations of quantitative risk models and will argue that schemes need to consider the risks they are facing in aggregate, accepting that within the context of asset and liability management (ALM), not all risks can be measured. The idea of ‘resilience’ will be introduced, which is key to understanding our approach to responsible risk management.

Speak to an expert today.

Important Information

This is a Marketing Communication. This webpage contains marketing material about our fiduciary management service. This webpage does not represent impartial advice on this service. In certain cases, you are required to conduct a competitive tender process prior to appointing a fiduciary manager. Guidance on running a tender process is available from the Pensions Regulator.

This webpage is provided by SEI Investments (Europe) Ltd ("SIEL"). SIEL is authorised and regulated by the Financial Conduct Authority. Financial Services Register Firm Reference Number (FRN) 191713. Registered office; 1st Floor, Alphabeta, 14-18 Finsbury Square, London EC2A 1BR. Registered in England and Wales – company number 03765319. This webpage is intended for Institutional Investors only and should not be distributed further. While considerable care has been taken to ensure the information contained within this paper is accurate and up-to date and complies with relevant legislation and regulations, no warranty is given and no representation is made, as to the accuracy or completeness of any information and no liability is accepted for any errors or omissions in such information or any action taken on the basis of this information. The views and opinions in this webpage are of SEI only and are subject to change. They should not be construed as investment advice. Sustainability guidelines may cause a manager to make or avoid certain investment decisions when it may be disadvantageous to do so. This means that these investments may underperform other similar investments that do not consider sustainability guidelines when making investment decisions. There can be no assurance goals will be met. If a product or strategy is subject to certain sustainable investment criteria it may avoid purchasing certain securities when it is otherwise economically advantageous to purchase those securities, or may sell certain securities when it is otherwise economically advantageous to hold those securities. Sustainability is not uniformly defined and scores and ratings may vary across providers.

Additionally, this investment may not be suitable for everyone. If you should have any doubt whether it is suitable for you, you should obtain expert advice. Please refer to our latest Prospectus (which includes information in relation to the use of derivatives and the risks associated with the use of derivative instruments), Key Investor Information Document, Summary of UCITS Shareholder rights (which includes a summary of the rights that shareholders of our funds have) and the latest Annual or Semi-Annual Reports for more information on our funds, which can be located at Fund Documents (https://seic.com/en-gb/fund-documents). And you should read the terms and conditions contained in the Prospectus (including the risk factors) before making any investment decision. The UCITS may be de-registered for sale in an EEA jurisdiction in accordance with the provisions of the UCITS Directive.

The portfolio allocation may include exposure to Irish Common Contractual Funds (“Irish CCFs”)  which are authorised by the Central Bank of Ireland pursuant to the Investment Funds, Companies and Miscellaneous Provisions Act 2005 and the European Union (Alternative Investment Funds Managers) Regulations (as amended) (the “AIFM Regulations”). The Irish CCFs are managed by SEI Investments Global, Limited an Irish private limited liability  company which is authorized by the CBI pursuant to the AIFM Regulations. The Irish CCFs are subject to the Central Bank of Ireland’s regulatory regime for alternative investment funds contained in the AIF Rulebook and qualify as qualifying investors scheme for the purpose of the AIF Rulebook. As such, the Irish CCFs may be marketed solely to Qualifying Investors. SEI Investments (Europe) Ltd acts as the distributor of the Irish CCFs. 
 
The portfolio allocation may include exposure to non-EEA Alternative Investment Funds managed by SEI Investments Management Corporation (“SIMC”) which may not be subject to the AIFM Regulations or equivalent legislation or regulatory oversight in those particular jurisdictions.
 
SEI Alternative Investment Funds may be non-standardised and bespoke, and may invest in a variety of underlying assets such as shares in unregulated collective investment schemes which do not provide a level of investor protection equivalent to collective investment schemes, debt securities including collateralized loan instruments, asset backed securities and other forms of structured credit, property, commodities or fund-of funds mutual funds. Alternative Investment Funds by their nature involve a substantial degree of risk, including limited liquidity, lack of regulatory oversight, tax risks, investment risks, risks inherent to investments in highly volatile markets, risks related to international investment, risks pertaining to various investment techniques that may be employed by the fund, risks related to the ability to diversify investments, risks related to the accuracy of valuations of investments, and conflicts of interest and the risk of complete loss of capital and are only appropriate for parties who can bear that high degree of risk and the highly illiquid nature of an investment. 
 
SEI Alternative Investment Funds often engage in leveraging and other speculative investment practices that may increase the risk of investment loss. It should be noted that they may not be required to provide periodic pricing or valuation information to investors and may involve complex tax structures and delays in distributing important tax information, are not subject to the same regulatory requirements as SEI’s range of UCITS or the Irish CCFs, and may often charge higher fees and offer limited liquidity.