With the aim of continuously increasing awareness and responsibility for risk management at all levels, compenswiss has developed a solid framework based on three key principles: prevention, detection and response.

The implementation of this framework is reviewed regularly to make sure it is in line with industry best practices and has the capacity to adapt to new risks.

Financial risks relating to investments

Financial risks are by their nature among the most significant risks facing compenswiss, given its activities.

According to Article 3 paragraph 4 of the Social Security Funds Act, «the assets of the social security funds must be managed in such a manner that each social security fund is guaranteed the best possible balance between security and achieving a return consistent with market conditions in accordance with its investment and risk profile».

The investment strategy and related tactical ranges are based on the propensity to risk approved by the Board of Directors. The Management Office also ensures that the principle of risk diversification is applied.

Market risks 

Systemic market or security-specific risks may cause the value of investments and thus the assets of the funds to fluctuate. compenswiss can hedge certain of these market risks on a centralised basis.

Liquidity risks

Sufficient liquidity must be maintained at all times for each Social Security Fund in order to pay the compensation offices the account balances in their favour and to provide them with the advance funds necessary for the provision of statutory benefits. 

Credit risk 

Credit risk concerns the creditworthiness of a counterparty. The solvency is assessed by ratings that take into account the risk of default. compenswiss sets credit limits and validates or revokes the use of counterparties for monetary investments or derivative transactions

Compliance risks

Compliance risks arise from non-compliance with legal, regulatory or internal provisions. They are subject to in-depth monitoring. With regard to investments, compenswiss ensures that portfolio managers comply with the defined investment limits and certain regulatory ratios as well as their contractual obligations. 

In order to take into account the continuous evolution of international laws and regulations having a direct or indirect impact on its activities, compenswiss has set up a regulatory monitoring system.

Operational risks

Mapping operational risks

compenswiss strives to minimise operational risks by identifying, analysing and assessing key factors such as people, processes, systems and service providers as part of a risk cartography. This is in addition to monitoring operational incidents with a qualitative and quantitative analysis, which makes it possible to optimise processes and systems including the Internal Control System (ICS).

Business Continuity Management (BCM)

BCM is a process that aims to protect the integrity of an entity. By identifying its risks, the institution can prepare adequate measures and responses to threats. compenswiss has developed a continuity plan that covers a large number of scenarios and is tested regularly.

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