The Pensions Regulator (TPR) has stated that it is "alive" and responding to the eight risk 'hotspots' identified in the Joint Forum on Actuarial Regulation’s (JFAR) updated Risk Perspective report.

The regulator emphasised that it had been working "closely with the industry" to mitigate the risks highlighted by the group and protect member outcomes.

TPR head of actuaries, Sarah Tune, commented: “The work carried out by actuaries is vital to the financial planning and investment strategies of all pension schemes and so we welcome this report which highlights the most pressing and emerging risks which could threaten retirement savings if not properly tackled.

“We are alive to the areas flagged in the report and continue to work closely with the industry to ensure savers remain protected.”

The report highlighted climate risk as the biggest risk facing high quality actuarial work, describing it as potentially “the defining risk of our times”.

Echoing the regulator, JFAR emphasised the “important role” that actuaries can play in assisting others to mitigate the worst effects of climate change.

However, the group also highlighted a new inclusion, ‘systematic risk’, which considers the potential impact of the current pandemic on actuarial work.

It revealed that systematic risk has both health and economic impacts, and poses a threat to actuarial quality as it affects the typical scenarios used in actuarial models.

JFAR is also considering what further work might be undertaken to better understand and address this risk.

Other risks identified by the group included an ageing population and affordability issues, unfair outcomes, geopolitical, legislative and regulatory risk, and the impact of undue commercial pressure.

Commenting on the findings, Financial Reporting Council CEO, Sir Jon Thompson, added: “The current coronavirus pandemic highlights the importance of identifying and managing risk. It will understandably introduce additional risk and uncertainty into the work of actuaries.

“The Risk Perspective takes a holistic view of this and other key risks to the quality of actuarial work.

“Actuaries, employers and users of actuarial work are encouraged to collaborate effectively to understand and mitigate the risks to high quality actuarial work and to explore opportunities in the public interest.”

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