Own-risk assessment

(1) An own-risk assessment, which must be documented, belongs to a pension fund's risk management system. The own-risk assessment must be carried out for the entire risk profile at least every three years, and more frequently at the supervisory authority's request. The pension fund must carry out an own-risk assessment without delay where a material change has occurred 1. in its risk profile, or 2. in the risk profile of the retirement provision schemes it operates. Where, in the case of the third sentence, point 2, only one retirement provision scheme is affected, the own-risk assessment may be limited to that scheme. Pension funds must inform the supervisory authority of the outcome within 14 days of completing each own-risk assessment carried out.
(2) As part of the own-risk assessment, the pension fund must 1. describe how the own-risk assessment is incorporated into the pension fund's management and decision-making processes; 2. assess the effectiveness of the risk management system; 3. describe how it prevents, or deals with, conflicts of interest with the sponsoring undertaking, where the person responsible for a key function simultaneously performs a similar task at the sponsoring undertaking; 4. assess the overall funding need and, where applicable, describe measures to cover the funding need; 5. assess the risks existing for prospective and current beneficiaries in relation to the payment of their retirement benefits, and evaluate the effectiveness of countermeasures, taking into account, where applicable, any existing a) indexation mechanisms, b) mechanisms for reducing entitlements and claims to retirement benefits, also stating the conditions under which, and the extent to which, entitlements and claims may be reduced and who carries out the reduction; 6. carry out a qualitative assessment of the mechanisms protecting entitlements and claims to retirement benefits, including any existing, for the benefit of the pension fund or of the prospective and current beneficiaries, a) guarantees, binding commitments, or financial support of any other kind from the sponsoring undertaking, b) insurance or reinsurance arrangements with an undertaking falling under Directive 2009/138/EC, or c) coverage by a pension protection scheme; 7. carry out a qualitative assessment of the operational risks; 8. assess the newly arisen and the risks expected to arise as a result of the pension fund taking environmental, social, and governance factors into account in its investment decisions. The assessment under the first sentence, point 8, must include, among other things, risks connected with climate change, the use of resources, and the environment, as well as social risks and risks connected with the impairment of assets caused by changed regulation.
(3) For carrying out the risk assessment under subsection (2), the pension fund must use methods enabling it to identify and assess the risks that 1. affect it, or could affect it, in the short or long term, and 2. could affect the pension fund's ability to meet its obligations. The methods must be appropriate to the scale, nature, extent, and complexity of the pension fund's activities, and must also cover the risks named in subsection (2), second sentence. They must be described in the own-risk assessment.
(4) The own-risk assessment feeds into the pension fund's strategic decisions.