RiskFirst to revolutionise the DB pension industry
15 November 2009
RiskFirst to revolutionise the DB pension industry with actuarial valuations in 24 hours
No more woolly numbers!
In a move set to revolutionise the defined benefit pensions industry, RiskFirst is launching PFaroe® , a web-based managed service which will bring new levels of precision to the measurement and management of DB risk. In an industry renowned for opaque and woolly reporting, leaving it increasingly out of step with modern standards of corporate governance, PFaroe offers definition and speed of management information unrivalled by any other provider.
PFaroe provides clarity, timeliness and definition to the valuation and understanding of the complex area of DB risk - something the industry has lacked for far too long. PFaroe® does this by generating actuarial valuations within 24 hours, in a clearly presented format supported by detailed and transparent assumptions. Cashflows are produced at an individual scheme member level and for each scheme asset, allowing users to conduct multiple, user defined scenario analyses.
PFaroe® delivers accounting, actuarial and solvency valuations on demand on a 24 hour turnaround, regardless of scheme size.
Despite its sophistication, PFaroe® is designed for users with no actuarial expertise, enabling them to perform instant sensitivity testing on both assets and liabilities by altering assumptions for longevity, interest rates, inflation and investment mix. It also allows users to conduct standard VaR analysis or scenario testing, and refine benefit design. In addition, because it is web-based and available to sponsors, trustees and consultants, PFaroe® provides a powerful tool to facilitate consensus in negotiation between the scheme stakeholders.
The launch of PFaroe® follows a rigorous beta-testing program in conjunction with several leading UK companies, including Aga Rangemaster Group, Alliance Boots, Daily Mail & General Trust and JPMorgan Cazenove. These schemes account for £8bn of liabilities and 150,000 members. A beta program for selected US customers is scheduled to commence in the first quarter of 2010.
Benjamin Reid, Partner and CEO of RiskFirst Analytics, said:
"Recent volatility in the financial market has dramatically exposed the fact that the DB industry significantly lags behind modern management practices in other sectors of the financial markets. This is because trustees and scheme sponsors have not had access to the appropriate tools to accurately measure and manage their scheme risks and as a result most pension trustees, CFOs and corporate treasurers lack an accurate picture of the risks to which the sponsoring company's balance sheet - and therefore its shareholders - are exposed. Quite simply, if you can't measure risk, you can't manage it.
"Having developed PFaroe initially to manage our own exposure to DB risk, we have decided to make PFaroe® available to all managers of DB risk, because we believe it is vital that standards of risk management in the sector are radically improved. PFaroe will provide DB managers, for the first time, with a clear understanding of their risk exposures and it will completely change the way they manage risk."
Comments from beta customers:
"In a few years time we will ask ourselves how we ever managed without a tool like this." CEO, beta customer - April 2009
"For the first time, it allows you to have the risk-conversation." Pensions Manager, beta customer - May 2009
"PFaroe borders on the brilliant." Pensions Manager, beta customer - May 2009
"Every time I see PFaroein operation … I wonder how trustees manage their schemes without a tool like this.… every trustee board in the land will want it … and it will completely change the way they run their schemes." Trustee, beta customer - June 2009 "The availability of detailed and timely reporting on a scheme's liabilities … bridges the gap for asset managers considering more sophisticated investment strategies." Investment Committee Member, beta customer - September 2009