Risk Management

The Plan's risk management strategy is constantly evolving to lead with industry best practices, using cutting-edge modelling, projections and simulations to assess risk appropriately. Risk management is a key part of building the overall portfolio and it informs all investment decisions.

Main risks

Interest rate risk
Downward fluctuations of interest rates have a direct and substantial effect on the Plan's financial situation.

Market risk
Financial market volatility could lead to negative returns, which would impact the contributions needed to properly fund the Plan.

Longevity risk
Plan members living longer than expected or updates to mortality tables could drive costs up.

Liquidity risk
The Plan must have enough money available to fulfill its financial obligations at all times.


Solutions

An exhaustive risk register
The main purpose of the risk register is to identify risks to the Plan's administration and financial management. Each risk is assessed and tracked using indicators for which targets and guidelines are determined. The tracking process helps make sure objectives are met by identifying the reasons of the exceedance and correcting the strategy, if necessary. 

A resilient asset allocation strategy
Assets are allocated dynamically and based on risk coverage. Such a strategy aims to maximize Plan's resiliency to as many economic scenarios as possible while ensuring low-cost funding. 

A targeted investment approach
The investment plan details what role the major asset classes play in the total portfolio and what features investments should have. A rigorous investment process is applied to ensure that investment decisions and objectives are consistent. 

A customized mortality table
To better estimate how long Plan members will live, standard Canadian mortality tables are customized on an annual basis using actual DGPP members' experience and socio-economic analyses.