Cybersecurity, compliance, and responsible investment are among the key areas of concern for superannuation funds, according to research.
KPMG’s Risk Management Trends in Superannuation report found strategic risks and managing talent were also demanding growing focus from small industry and corporate super funds.
These five risk areas were largely aligned between Australia and its global peers. While funds had solidified their capabilities in managing traditional risks like liquidity and investment, most were less mature in managing non-investment risks like data protection and ESG.
But while regular risk reporting had been established, there was room for improvement. Less than half (40%) had a dedicated management committee for all risks compared to 30% that had a dedicated management committee for investment risk.
“A considerable amount of time and attention is being spent by boards on operational matters. This coupled with a lack of proactive identification of skill gaps (e.g. cyber risk) may hinder effective strategic risk management,” the report stated.
There is a lack of comprehensive documentation of key risk management discussions at the Board making it difficult to demonstrate ongoing risk oversight to the regulators.”
Some 75% of respondents had appointed a chief risk officer (CRO) while a quarter (25%) had a CRO with a dual role and KPMG said the ‘battle for talent’ would only get more intense going forward.
However, the use of data analytics was rising, the report found, with faster reporting and data-driven insights among the highly-desired outcomes for respondents. More Australian respondents (80%) had an integrated governance, risk, and compliance compared to global peers (30%).
“Effective risk management is essential for supporting funds to successfully achieve their strategic objectives. While we have seen improvements in risk management more will need to be done to meet enhanced regulator expectations.
“Assessing the interconnectedness of material and emerging risks and their impacts across the organisation together with comprehensive scenario analysis is fundamental,” the report stated.
Future Group is set to take on nearly $1 billion in funds under management (FUM) and welcome more than 100,000 new members following two significant successor fund transfers.
Insignia’s Master Trust business suffered a 1.9 per cent dip in FUA in the third quarter, amid total net outflows of $1.8 billion.
While the Liberal senator has accused super funds of locking everyday Australians out of the housing market, industry advocates say the Coalition’s policy would only push home ownership further out of reach.
Australia’s largest superannuation fund has confirmed all members who had funds stolen during the recent cyber fraud crime have been reimbursed.