The Georgian Pension Fund’s Management Board has approved a new Risk Management Framework, which came into force immediately upon publication. The document establishes procedures for managing, monitoring and reporting both investment and non-investment risks arising from the fund’s operations.
The framework introduces a “three lines of defence” model. The first line consists of the fund’s departments, which manage risks in their daily activities. The second is the Risk Management Department, operating under the Chief Risk Officer and independently monitoring compliance with risk limits. The third line is the Internal Audit Department, which oversees the effectiveness of internal controls and reports directly to the Management Board and Audit Committee.
The framework also establishes a zero-tolerance policy for serious non-investment risks, including fraud, corruption, money laundering, deliberate misconduct, major regulatory violations and personal data breaches. Investment risks cover market, credit, currency, liquidity, concentration and asset valuation risks, while non-investment risks include operational, strategic, cybersecurity, legal and reputational threats.
The Chief Risk Officer and Risk Management Department will conduct regular stress tests and scenario analyses to assess the potential impact of economic shocks on the investment portfolio. The framework also requires monthly and quarterly reporting to the National Bank of Georgia and the Pension Fund’s Management Board. The National Bank remains responsible for regulating and supervising the fund’s activities.
