For 2023, the Fund has implemented a governance structure, management processes, and internal and external oversight mechanisms to adequately identify, assess, manage, monitor, and report the risks inherent to its operations.
The Fund has also disclosed its non-investment risk factors (geopolitical risks, business transformation, culture, cybersecurity, business continuity management, data and sustainability) and risk governance and management practices in the Fund’s Statement of Internal Control annexed to the Financial Statements, which is available here.
Achievements:
Investments and market risks: In 2023, the stock and bond markets rebounded strongly from a challenging 2022. Despite a regional banking crisis in the first quarter that raised concerns about a credit crunch, the Fund remained resilient. The economy stayed robust, and inflation cooled. The United States Federal Reserve raised interest rates four times during the Page 7 of 76 year, but officials indicated at their December 2023 meeting that they do not plan to raise rates further and may even lower them in the coming year. The Fund’s commitment to stability and adherence to industry standards was evident as it conducted a quadrennial ALM study in 2023 and successfully implemented new benchmarks and strategic asset allocation in February 2024. Additionally, the Fund remained compliant with the Global Investment Performance Standards (GIPS).
Risks derived from inflation and geopolitical crises: the Fund started performing reverse stress testing to gauge inflation risk’s impact on Fund sustainability alongside scenario analysis, including climate scenarios. In addition, the Fund continues to diversify channels to distribute pension benefit payments, to offer new digital services to lower banking charges for beneficiaries located in countries impacted by disruptions in the international transaction system.
Business Transformation: The Fund has recognized that business transformation is required to prepare and respond to global and long-term structural challenges, and to generate better outcomes for internal and external clients. In 2023, the Fund’s Pension Administration continued to implement and extended the CARE (Client-focused, Action-oriented, Relations-builder, and Efficiency-driven) Strategy and related roadmap and projects, with a focus on integrating modern technologies and continuous improvement into business processes. In 2023, the introduction of new benefit payment channels, automated scanning and signature verification, and new functionalities in the Fund’s Digital Certificate of Entitlement provided enhanced service to In 2023, the Fund’s Investment Management section updated its Target Operating Model to define business and organizational transformation strategies aimed at achieving effective collaboration and standardized or seamlessly integrated business processes, data, technology, and communication.
Organizational Culture: Strengthening the Fund’s culture has been identified by management as key to the success of the Fund’s overall strategy. A Leadership Culture Assessment in line with the United Nations System Leadership Framework has been conducted annually since 2021 with the participation of a majority of UNJSPF staff to identify priorities for culture work. In 2023, culture work has been focused on communication, collaboration, and transformation. Complementarily, the Fund has largely fulfilled the objectives of the Human Resources Strategy 2021-2023; the training strategy and guidelines; and Gender Strategy, resulting in processes and principles to promote a more satisfied and skilled workforce and a gender sensitized work environment.
Cybersecurity risk: During 2023, the Fund continued to enhance its information security framework and processes to respond to emerging technologies and increasingly sophisticated threats, including disruptive capabilities of manipulated information and access to large-scale artificial intelligence models. The Fund continued to maintain the ISO27001:2022 Information Security Management System certification to ensure appropriate cyber risk controls are in place, and the delivery of mandatory training and awareness training to staff, including phishing campaigns. Third-party managed Security Operations Centers provide around-the-clock monitoring and incident management for security events, to ensure data assets remain protected.
Business Continuity Management: The Fund continued maintains a robust business continuity management governance framework with defined continuity plans and IT disaster recovery. The Fund has full remote working capability for all teams, to allow continuity of critical business functions and physical isolation of staff. Resilient data-center hosting arrangements are in place providing high availability for key ICT (Information and communication Technology) systems. During 2023, the Fund’s Pension Administration gradually moved ICT systems to the Cloud to enhance resilience and achieve further efficiencies, while focusing on crisis preparedness and crisis management for unexpected complex scenarios. In March 2023, the Fund’s Investment Section successfully moved to a new infrastructure as a service provider and focused on ensuring the resilience of critical service providers.
Data Governance: the Fund has undertaken projects to develop and implement a data governance framework as a key enabler to realizing the objective of becoming a data-driven organization.
Sustainability Risks: The Fund maintains a comprehensive sustainability framework and commits the targets set by the United Nations Secretariat Climate Action Plan. During 2023, the Fund expanded the mechanisms for integrating Environmental, Social and Governance (ESG) factors into investment decision-making and internal processes.
