Human resources consulting firm Aon Hewitt has created a risk analysis program to help pension plans measure and manage risk.
Aon Hewitt says that its Risk Analyzer program uses real-time data to allow defined benefit sponsors to monitor the plan’s funding status and determine what risks are in play.
The program is able to show asset information and track multiple liabilities on a daily basis. It can also determine how market movements and cash flow affect these assets and liabilities, providing greater understanding of the risks to a plan’s financial health. Finally, Risk Analyzer calculates a plan’s exposure to fluctuations in interest rates and the equity market, and is able to both identify and measure the top risk factors to the plan’s funded status.
“Faced with volatility in interest rates and equity markets, more pension plans are implementing, or at least considering ways to mitigate risk; but to do that effectively they need to fully understand the current status of their plans and the factors driving risk now and in the future,” comments William da Silva, Senior Partner, Retirement Practice at Aon Hewitt. “Along with our Longevity Model, which assesses the impact of plan member longevity on funded status, Risk Analyzer provides our clients with an unrivalled understanding of both financial and demographic risks at a plan-specific level, allowing them to take appropriate and effective action.”