Investment risk management
Investment risk management is integral to our business. It is fundamental to our fiduciary role to deliver long-term value that meets our client’s needs.
Railpen’s mandate is to advise on and manage this investment risk on behalf of the Trustee to deliver sufficient long-term returns from the assets to meet the schemes’ needs. Railpen is guided by our investment beliefs which inform our approach to taking and managing risk, aligning investment decisions with long term desired client outcomes.
Railpen has implemented a robust Investment Risk Governance framework, approved by the Trustee board. The Investment Risk Governance Framework defines the structure and relevant processes and documentation for the governance surrounding the management of investment risks across the Schemes, Sections and Pooled Funds, and it ensures a strong oversight of investment decisions.
A fundamental aspect of managing investment risk is to ensure the level of investment risk taken aligns with our client’s appetite and tolerance. Actively managing and overseeing investment risk allows us to avoid taking unintentional risks and to address uncertainty, whilst allowing us to manage risks as they arise.
Our investment risk management process takes a holistic approach to managing investment risk; spanning schemes, sections, pooled funds, asset class and individual investments. Simultaneously it includes a robust process around the valuation of investments which is independent from investment decision making.
Investment risk management
Our risk management function integrates investment risk considerations into both top-down and bottom-up investment decisions. This function is integrated into the investment decision-making processes to provide appropriate risk advice at key stages. This includes the development and maintenance of all necessary risk management frameworks and reporting requirements pertaining to the investment teams and pooled funds. Risk Management also includes the maintenance and development of risk management frameworks that set risk limits, thresholds and tolerances for market, credit, liquidity, counterparty, leverage, inflation and currency risks.
Analytics and reporting
Our analytics and reporting function is responsible for the measurement, analytics and reporting of risk and performance, as well as for managing and maintaining all risk tools, systems and data. This includes monitoring and reporting on all aspects of investment risk and performance which is central to how we identify, monitor and communicate investment risks associated with our investments.
Our investment valuation function is responsible for the valuation of all assets across Railpen, albeit with a primary focus on the valuation of our directly owned private market assets. The function ensures accurate and timely valuation of assets, including in the acquisition process for new assets. Where valuations are conducted externally, the function is responsible for managing and reviewing the work of external agents and ensuring appropriate mechanisms and controls are in place.