Acute or Obtuse – an angled guide to risk managed triangles

The Integrated Risk Management (IRM) diagram is shown in absolute perfect symmetry.  The equilateral triangle, surrounded by a perfect circle.   With any equilateral triangle, the movement of angles result in it becoming acute, or obtuse.

Now, lets think about how we work an IRM strategy when we have one component part we cannot quantify.  The point I am thinking about is covenant.  The only certainty for the majority of employers over the next few years is going to be uncertainty.  With a potentially fundamental change in how our country is run, how do we, as Trustees, properly assess the ongoing strength of our Employers.  We don’t know if they will win, lose or draw following the inevitable changes.  We don’t know if anyone is able to fully answer this question with any certainty.  Therefore our lovely balanced equilateral is bent out of shape.

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The google translate definition of obtuse is “annoyingly insensitive or slow to understand.”.  Now, this is something a Trustee cannot be.  The 21st century Trustee should be tackling these issues head on, and be looking at the other points to build balance to the triangle.  Whilst uncertainty would normally be coupled with prudence, the funding/investment regimes give Trustees the levers to balance risk and to make pragmatic and sensible decisions.  These decisions designed to support and aid the corporate in difficult times to the benefit of the membership (not to mention the employed workforce).  We are of course, long term investors who should not be unduly swayed by short termism.

Google translate tells me acute is “having or showing a perceptive understanding or insight”.  This should be the 21st century Trustee.  A wise man (cough) once wrote:

“As a trustee you should not be saying “I didn’t expect that result” on the 24th June, you should be sitting in a settled state knowing you have considered the risks, and are positioned to move forward regardless of the result.”

At the current time, many trustees may be staring at obtuse triangles unable to find the balance.  If Trustees take sensible, informed, thought out decisions – they should find their equilibrium.

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Chris Roberts
Chris Roberts

Chris' experience includes complex investment strategy reviews, scheme wind ups, PPF transitions, defined contribution trusteeship, working with overseas parents and negotiating complex recovery plans.