Risk Management
Assessing and managing financial and strategic risk
How Does TRS Manage Risk?
The Investment Management Division (IMD) works closely with the TRS board of trustees to establish, monitor, and report its various risk metrics. Further, the IMD has the required authority to efficiently and effectively implement associated actions.
Risk Management is essential to the entire investment process. TRS has an internal risk management team in the IMD as part of the Risk & Portfolio Management group. The risk management function is overseen by the board's investment committee.
The team uses a three-step process to manage risk: Identify, Prepare, Act.
A large suite of risk signals is generated and monitored daily to flag potential concerns. A comprehensive ‘Risk Monthly’ report is distributed internally to highlight key topics. Lastly, a semi-annual report is presented to the board of trustees providing a summary of the material shared in ‘Risk Monthly.’
TRS Risk Boundaries
Specifically, the TRS pension trust fund is governed by risk limits for seven primary categories: Asset Allocation, Value at Risk, Tracking Error, Leverage, Liquidity, Country party, and Derivative Exposures.
