Sponsors Should Rethink Risk-AIMR

“Clearly [this situation] highlights the need for plan sponsors to assess firm risk
management – that is, protecting against all the risks, not just the usual
sort such as the stock market decline – of themselves and of their
managers and custodians,” said Craig Ruff, vice president of the Charlottesville, Virginia-based Association for Investment Management and Research (AIMR).

Ruff said plan sponsors should focus on issues such as:

• Is there sufficient redundancy of a plan sponsor’s, managers’ and custodians’ records? 
• What is the procedure if the plan sponsor’s entire staff is incapacitated? 
• What is the procedure if an entire staff for a sponsor’s asset manager is incapacitated?
• Should managers be diversified geographically?
• Is the plan protected against Web-trading terrorism?

AIMR Vice President Kathryn Jost said she sees no immediate impact on how sponsors will be able to conduct business, despite this week’s events.

“I don’t see any real operational difference from the normal necessary continual re-evaluation of investment strategy prompted by changing world events,” she said.

“Individual plan sponsors would have to huddle with their managers to ascertain any changes in their perception of how possible future events and economic repercussions would alter their fundamental, strategic and tactical investment plans.”

Founded in 1990, the AIMR was created from the merger of the Financial Analysts Federation (FAF) with the Institute of Chartered Financial Analysts (ICFA). Today, the international nonprofit organization boasts more than 49,000 investment practitioners and educators in over 100 countries.