A sensible approach to risk
Every investor knows that risk and return go hand in hand. In order to generate returns, you need to be willing to accept a responsible and controlled degree of risk. To identify risks in a timely manner and control them as effectively as possible, APG follows the ‘Three Lines of Defense’ model, a tried-and-tested method for optimal risk management. In order to implement this model, APG has divided all risk monitoring duties and responsibilities between three successive ‘lines of defense’.
‘Three Lines of Defense’ model
The first line of defense in risk monitoring is made up of our investors, who are responsible for recognizing and controlling risks. The second line of defense comprises risk managers who autonomously (and independently from the first line of defense) bolster APG’s risk management, set and evaluate risk management guidelines, and work on methods and techniques for effective risk management and control. And the third line of defense is our internal audit department, which oversees the quality and effectiveness of our risk management practices.
Balancing responsible risk management and sustainable investment returns
These three lines of defense work together like a safety net that ensures that risks are kept under control. This structure involves a range of different specialists – investors, advisors, risk managers, compliance officers, and internal auditors – who assess from their respective roles and based on their respective expertise how we handle risks and how we could further improve our risk management. This is how we maintain a balance between responsible risk management and healthy and sustainable investment returns.