Measure it to manage it (TT Nov06 p24-27)

Risks are rising for defined benefit pension schemes, driven by financial, sponsor credit, regulatory and demographic change. Such risks must be first identified, and then quantified. A battery of measures, such as inflation and interest rate swaps, are effective ways to control much of the risk. The burgeoning market for bulk annuities could offer the best opportunity for scheme trustees and sponsors to manage risk.