Portfolio and risk
AP4 takes well-balanced risks in its management and good risk management is necessary in order to conduct successful asset management. Risks should be forecast before an investment and controlled retrospectively. Risk management is divided into three stages: risk management, which is a framework for risk tolerance, ongoing risk management, and follow-up and control. These are briefly described below:
AP4's Board of Directors annually adopts an investment policy and a risk management plan for AP4's operations. Together with the AP Funds Act, these governing documents form a framework for AP4's risk space.
Continuous risk management
AP4's daily risk management and control is decentralised to all operational parts of the organisation and follows the principle of three lines of defence, which distinguishes between functions that own risk (first line of defence), functions for monitoring, control and compliance (second line of defence) and functions for independent review (third line of defence). AP4's application of three lines of defence is adapted to what is deemed appropriate for AP4 and does not fully comply with regulatory requirements.
Monitoring and control
Risk & Operational Support is responsible for monitoring AP4's financial and operational risks. This means checking that statutory investment rules, Objectives and Guidelines, the requirements of the risk management plan and CEO decisions are complied with in the business. Risk & Operations Support's work includes carefully measuring and analyzing and daily reporting returns and risks, both in absolute terms and relative to the benchmark index, and reporting any violations of current regulations.