24th March, 2010, Newbury, UK. As The Pensions Regulator starts to raise the bar for pension scheme risk management, risk management software will become an essential component for pension schemes to effectively and efficiently comply with The Regulator’s guidance.

In December, The Regulator issued a consultation paper on the revised guidance on internal controls which stresses the importance of risk management in internal controls.

The Regulator expresses the need for schemes to maintain an adequate risk register. However, many schemes only produce a paper spreadsheet based risk register, which becomes merely an exercise in box ticking, rather than an effective approach to managing risk.

The continued extension of the Regulator’s guidance must soon require schemes to allow all stakeholders to see, use and contribute to the risk register.  Furthermore, it is only a matter of time before risks will be required to be devolved to appropriate individuals and for proper audit trails not only to be kept but to be available when a risk is reviewed.

The only way to achieve such an integrated and effective risk management programme will be to turn to software.  This is especially true for smaller schemes who simply don’t have the resource and finance to hire the staff needed to manage this complex governance aspect effectively.

 “To be effective the risk register needs to be a living system that anyone can review and contribute to on an ongoing basis” says Alister Esam, CEO of eShare, “For this to happen the risk register must be centrally accessible and incorporate all associated information, not just a file or spreadsheet stored on one person’s computer or desk.”

For risks to be managed consistently this cannot be done manually. Governance technology creates a centrally accessible living risk register where all scheme risks, mitigating actions, audit trails and scheduled reviews can be viewed and managed, along with automatic alerts and reminders to ensure no risk is neglected and correct procedures are followed in managing each risk.

“A lot of schemes are already using this software to manage risk.” says Esam, concluding ”One day soon we will wonder how we ever managed risk effectively without software - and the answer will be that we didn’t!”

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