Last year, the Ontario Municipal Employees’ Retirement System embarked on a journey to redefine its risk management strategy, with the process pushing the organization to separate its views on risk into three categories.
After becoming the OMERS’ chief risk officer in June 2023, Deb Barnes asked the organization’s board for a mandate to refresh the risk framework and risk appetite statement. “A big part of my role is to help the organization see the risks that matter, not get distracted, focus our attention on the right place and then have the right conversations in the right forums to make sure that we’re dealing with them appropriately.”
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Getting to know
Deb Barnes
Job title:
Chief risk officer, the Ontario Municipal Employees’ Retirement System
Joined the OMERS:
2020
Previous role:
Managing director, capital markets risk, the OMERS
What keeps her up at night:
The unpredictability and volatility of the investment markets
Outside of the office she can be found:
Staying active with runs, table tennis matches with her son and focusing on the details of a complex paint-by-numbers drawing
The first new category is uncompensated risks, meaning operational challenges, such as fraud, conduct, trading or processing errors. The second risk bucket relates to necessary investment risks, which carry a strategic benefit but require optimization. And the third risk section is all about external threats that are less manageable from within the investment organization.
“My role is about safeguarding and making sure we’re taking the right type of risk,” says Barnes. “We’re seeing the risk, we’re being intentional about it and then we’re not blindsided by it.”
The OMERS’ risk framework was redeveloped alongside its new 2030 strategy, which was led by Jonathan Simmons, chief financial and strategy officer, and Anton Blagov, senior vice-president of strategy and actuarial services. The projects’ aligned timing helped ensure a shared vision, says Barnes.
The organization recognizes climate change as a significant risk for the next generation of plan members, she says, noting it thinks beyond calendar quarters by evaluating progress and risk years in advance, including an evolving climate outlook. Indeed, the organization is targeting net-zero for its portfolio and operations by 2050. In its latest annual report, the OMERS confirmed a 58 per cent reduction in its portfolio’s weighted average carbon intensity compared to a 2019 baseline.
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Barnes says her role involves being an independent thought partner at the OMERS, with an objective perspective that will deliver additional information for any decision to be taken. “People often think about risk as being about numbers and analytics. Those are foundational and very important, but I believe at the heart of it, risk is a relationship business and it’s about people.”
With the current volatility in pension funds’ traditional investment avenues, liquidity management is a top priority for Barnes’ team. “We have a lot of comfort with [our] liquidity position, but we are really mindful of where it sits and where we can be opportunistic [with our deployment].”
As large Canadian pension funds reconsider geographic allocations, many investors are signaling a stronger focus on Canadian-based assets. This dialogue reached the federal government, which appointed a working group to look for solutions to incentivize domestic investments without creating a mandate. Ultimately, the feds scrapped a rule preventing pension funds from owning more than 30 per cent of the voting shares of a Canadian entity.
The OMERS is enthusiastic about investing in Canada when all of the right elements come together, says Barnes. According to its 2024 annual results, more than $28 billion of its total $138.2 billion portfolio — or about 20 per cent — is domiciled in Canada. “Canadian assets are always attractive. We know the rule of law, we know the currency, we know the regions, we are invested in a number of assets across the country.”
Bryan McGovern is an associate editor at Benefits Canada and the Canadian Investment Review.