Recent events in Ukraine were brought up in Orkney’s council chamber, as one councillor asked if the situation should be considered a threat to the local authority’s pension fund.
Councillors on the pension fund sub-committee were presented with an update to the fund’s risk register.
Among the 29 risks to the fund achieving its objectives, there’s the retention of staff, working from home and changes to legislation.
However, during the sub-committee’s meeting today, councillor Steve Sankey asked, when events such as Brexit and the Covid-19 pandemic are included as risks, why aren’t the recent events involving Ukraine and Russia?
He asked: “When does a global issue become something that we on the Orkney pension fund need to worry about?”
Why are some global issues considered risks to Orkney council’s pension fund and not others?
Mr Sankey said, earlier in the day during a meeting with the fund managers Baillie Gifford, they had spoken about the potential for “a global crisis” caused by Russia’s activities and military action.
He said they had also spoken about China’s human rights issues.
He said: “None of this is reflected in our risk register yet.
“Brexit was, Covid was, and the current energy and cost of living crisis are.
“There could be a similar European crisis that is not represented in our register.
“When does our risk register respond and in what way to these global issues that undoubtedly could impact on it?”
Mr Sankey said the register needs to be dynamic and respond to threats as they are identified.
Colin Kemp, the council’s interim head of finance, replied. He said: “It’s similar to Brexit risks.
“We put that in the register a few years ago and we still haven’t bottomed out what the impact of that is going to be.
Ukraine situation ‘clearly having an effect on global markets’ says council finance chief
“If the Ukraine dispute goes to the next stage, it will probably be legitimate to see that added.
“It’s clearly having an effect on the global markets at the moment. People are starting to go and look for defensive positions.
“At the moment that’s not going to affect the pension fund investment strategy, which is still looking longer term.”
Mr Kemp said the Ukraine dispute could be added to the risk register if wanted.
However, Mr Sankey said his was a wider question. He asked at what point an issue like this appears on the risk register and how this is done.
Earlier in the meeting, the sub-committee were told the budget for the service areas under the sub-committee had come underspent by £30m between April and December last year.
This was against a budget of £18.7m.
This underspend was mainly due to the fund seeing more than expected from its investments.
