The annual ‘Chart Your Own Course” survey, which will be released in its entirety later this month, revealed that 23% of trustees of defined benefit (DB), scheme rated the above risk as their top concern.
LCP reported that over half of trustees rated their concern about cyber security and artificial intelligence as seven out ten or more. Trustees of larger schemes felt better prepared to deal with these risks than trustees of smaller schemes.
One in five respondents (21%) rated the “collapse of the swap or gilt market” as their greatest concern, while a similar number (18%) rated regulatory risk as their main concern.
One in ten (10%) respondents said that “societal upheaval” is their biggest concern, while 9% cited “longevity Swap Change” and “liability-driven investment spiral” as their top risks.
Climate change was the least concerning risk for trustees, with only 8%, followed by deflation with 1%.
Peter Shaw, senior consultant at LCP, said that the survey results are “encouraging”, as they show that cyber risk is “taken seriously”. He added trustees should have a proactive mindset and recognize the likelihood of such incidents happening rather than “assuming” they won’t.
Trustees can reduce cyber risks by adopting a mentality that focuses on ‘when’ and not ‘if.’ This includes understanding your scheme’s cyber footprint, performing regular risk assessments, as well as establishing a comprehensive plan to deal with cyber incidents when they occur.
LCP principal Chris Potts noted that the “interesting result” that the gilt and swap markets collapsed was still a high-ranking risk, adding that it is a “timely” reminder that many schemes did not “emerge unscathed from the 2022 gilts crises.
“It was a bit surprising to see climate changes near the bottom of this list. Perhaps it reflects trustees’ views that this is a long-term risk. Climate change is causing more damage than originally anticipated, and the effects are more severe. It is therefore important for trustees to consider climate risk and include it in their agenda.”