British Telecommunications Pensions Scheme Management (BTPSM), which oversees the UK’s largest private sector pension scheme, has gone live with Algorithmics for risk management purposes across its major asset classes and liabilities.
BTPSM is using Algorithmics’ Algo Risk Service to manage its overall scheme risk, develop appropriate overlay strategies, understand the performance of external asset managers, and monitor its investments at various levels. Algo Risk Service, a hosted risk management, portfolio analytics and decision support tool, is being used within BTPSM to help address risk from different perspectives including day-to-day risk management, decision support, asset manager review and risk reporting for senior management.
Wyn Francis, head of investment risk for BTPSM, said: “Algo Risk Service has enabled us to be more formal about how we assess and manage risk. Without a doubt, the service has provided a far more effective risk management framework for the scheme, challenging the way we look at risk across our portfolio.”
BTPSM had previously been using a number of legacy systems made up of third-party applications, together with proprietary tools. However, these systems were limited in their ability to aggregate risk. Francis added: “When you’re using different systems or approaches, it invariably means that risk is being calculated on an inconsistent basis. None of the approaches we were using consistently took into account the correlation between assets and liabilities when it came to risk exposure.”
Dr Andrew Aziz, executive vice president of Algorithmics, Buy-Side Solutions said,: “At a time when pension schemes funding ratios are under increasing pressure and experiencing greater volatility, we are delighted to be working in partnership with BTPSM to help develop the best industry risk management practices that Wyn and his team are establishing. This is setting new standards for the industry to aspire to.”
