V - Risk Planning And Management

 

After the 2008 international financial crisis shed light into the importance of risk management processes and the necessary transparency of financial and credit markets, the year 2009 can be considered a year of recovery. Brazil, one of the countries least affected by the global financial crisis, managed to minimize impacts on measures of fiscal and monetary stimulus, providing liquidity to financial markets and allowing companies to resume their process of growth and recovery.
 
Decree CMN n. 3,792/09, which concerns pension fund regulations, brought advances to the field of risk management. Although quantitative exposure limits were maintained, internal monitoring of entities became possible by building their own models. With the creation of Previc, an autarchy that oversees pension funds in Brazil, this limit relaxation will increase and move towards a model of risk-based supervision.
 
PREVI, anticipating this movement, has improved its internal model for Asset and Liability Management (ALM). Accordingly, the 2010-2016 Investment Policy began considering, besides the legal framework, a perspective of profit (expected surplus) versus risk (liquidity and asset concentration).
 
Additionally, PREVI has improved the control of credit risk in view of increasing opportunities for investment in private bonds. This control is already part of the investment policies of plans managed by PREVI, which uses its own methodology for risk classification and allocation of limits, approved and revised in 2009 so as to adjust the analysis and results to new market realities.
 
Both the constant improvement of planning and risk management tools and the ongoing training of technical personnel have made PREVI a reference for other pension funds and regulating agencies. This technologic and human tool was important during the international financial crisis because it minimized its effects and helped sustain the balance even at the height of the crisis.
 
All these initiatives aim to offer more security to resource management of plans managed by PREVI, thus providing increased benefits to participants.