The Risk Management team uses a risk management cycle to determine how targets are set and achieved. In this annual report, we describe the risk management of the management organisation.
In addition to the risks recognised for Bouwinvest, we have described the additional risks, definitions and control measures the real estate portfolio in bpfBOUW’s real estate investment plan and the fund plans for the Dutch sector funds. We report on these in the quarterly and annual reports.
Bouwinvest recognises the following risks for the management organisation:
• Continuity
• Integrity
• Quality
• Key people
• Legal and liability
• Fiscal
• Funding
• Reputation
Risk matrix
Risk | Definition | Control measures |
Continuity risk | The continuity risk is the risk that the management organisation can no longer meet the terms of its agreements with bpfBOUW, other clients, its own employees and the organisation | • REIM business plan
• Framework letters
• Investment plans and fund plans
• Annual plans business units and departments
• Reporting process
• Annual ISAE 3402 type II audit
• Business Continuity Plan
• Service Level Agreements with outsourcing partners
• Data security policy (COBIT) |
Integrity risk | Integrity risks are associated with non-compliance with laws and regulations (such as fraud and cyber crime) or transparency requirements of Bouwinvest, its employees or any party with whom Bouwinvest is conducting business | The Compliance policy and measures are explained in the next section |
Quality risk | This is the risk that the management organisation delivers poor quality, as a result of which Bouwinvest is unable to meet the terms of its agreements with its clients | • Framework letters
• Investment plans and fund plans
• Investment Committee
• Business partner due diligence
• Internal (process) control framework in accordance with ISAE 3402 type II
• External auditor
• Procedure for business incidents
• Pricing & Valuation Committee |
Key people risk | This is the risk that the organisation does not have employees with the right skills and qualities | • Transparent culture and remuneration policy
• Measures to ensure high levels of employee satisfaction
• Key position succession and promotion policy
• Building and maintaining reputation on the employment market |
Legal and liability risk | The risk of threats to the legal position of the organisation, including the risk of the possibility that contractual provisions cannot be enforced or are not correctly documented | • Internal Legal Affairs department
• External specialist law firms
• Various corporate and asset insurance policies (professional and directors liability)
• Risk checks on main assets
• Insurance manual |
Fiscal risk | This is the risk that the organisation’s fiscal position is determined incorrectly, as a result of which the current and deferred tax (position) is depicted incorrectly | • Internal Tax Affairs department
• (Structural) external involvement tax specialists (also evaluative role)
• Tax Policy Principles |
Funding risk | The risk that the funding position is not adequate and/or safeguarded, due to the fact that the growth of the organisation’s assets under management is not covered by the addition of new capital from investors | • Active approach to attraction of funding by the Client Management department
• Clear annual funding statement in the fund plans |
Reputation risk | In the event that one of the above-mentioned risks occurs, the occurrence of said risk is inevitably related to (some) measure of reputation damage | • Transparent and frequent communications with shareholders and clients
• Integrity Risk Analysis |
Monitoring and reporting
The Board of Directors monitors the risks related to Bouwinvest's various activities. To support this monitoring and to optimise risk transparency, the risk controller produces quarterly risk reports.
In 2017, there were three types of quarterly risk reporting:
Risk report for portfolio bpfBOUW
Risk report as part of fund reports for AIF funds
Business incident reports
Both the bpfBOUW portfolio and the fund risk reports were revised in 2017. This revision resulted in more transparent and compact reports on both aggregation levels. On top of that, the reporting on bpfBOUW's portfolio has been tailored to the risks that are identified in the pension fund’s risk charter. The format for business incident reporting remained unchanged in 2017.