CalPERS Narrows in on Compliance, Risk

(November 17, 2011) — The $229.4 billion California Public Employees’ Retirement System (CalPERS) has established a new post focusing on compliance and risk.

The position will be led by Carol Baldwin Moody, who will be responsible for developing, implementing and monitoring investment management compliance and operational risk programs and policies, the fund stated in a release. “Carol brings to CalPERS a wealth of legal and global financial experience and a deep knowledge of compliance and risk management issues,” said Janine Guillot, CalPERS Chief Operating Investment Officer, said in a statement. “Under her leadership, I’m confident our Investment Compliance function will set the highest standards in the development and rigorous enforcement of our risk management policies.”

Following painful losses that caused a 25% decline in the system’s investment assets in the fiscal year ended June 30, 2009, the fund has been aiming to improve its risk management capabilities. On March 1, the scheme announced the appointment of Larry Jensen as chief risk officer. In October, California Gov. Jerry Brown signed legislation that strengthened the chief financial officer position at CalPERS.

“These new laws allow CalPERS to continue to apply newer and higher standards of accountability, integrity, and openness to ensure public trust in our institution,” Anne Stausboll, CalPERS CEO, said in a statement. Furthermore, the legislation will encourage the formation of timelines for when board members and some staff members at both CalPERS and CalSTRS can move to certain other jobs, Stausboll explained.

Additionally, last year, following allegations of influence peddling, the California scheme revamped its governance policies, announcing two significant reforms designed to restore confidence – the establishment of a Senior Level Enterprise Risk Management Office and Enterprise Chief Risk Officer, and the launch of a new Ethics Helpline to identify fraud and waste. “Recent events on Wall Street, pension fraud in this state, and even allegations of wrongdoing at CalPERS have taught us that managing risk and ensuring accountability across the enterprise are critical to our effectiveness today and tomorrow,” George Diehr, who served as Acting President of the Board at the pension fund’s September Board meeting, said in a statement.

Click here to read an aiCIO exclusive interview with two of the most influential chief investment officers in America – Chris Ailman of CalSTRS and Joe Dear of CalPERS.