The California Public Employees' Retirement System (CalPERS) today announced two very significant reforms designed to restore confidence in CalPERS - 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.
The CalPERS Board of Administration approved the new Office of Enterprise Risk Management and intends to hire a Chief Risk Officer to help it take the organization to the highest level of risk management possible in the pension industry.
The Helpline will enable the pension fund to receive tips, concerns, and information regarding possible instances of wrongdoing - including possible allegations of fraud, waste, abuse, conflicts of interests, safety violations, harassment, or other misdeeds.
"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," said George Diehr, who served as Acting President of the Board at the pension fund's September Board meeting.
"It's a new day at CalPERS, and these additional tools for managing CalPERS are being added to a very important list of efforts we have undertaken in the last 12 months to restore confidence, integrity, and accountability to all that we do."
Other improvements include:
Co-sponsorship of legislation (AB 1743) that will require placement agents to be subject to strict gift limits, campaign contribution prohibitions, and be prohibited from receiving compensation contingent upon any CalPERS investment decision;
Tough rules for communication between Board Members and staff about investment proposals;
Authority to discipline Board Members who violate policy;
The pursuit of information and a special review to ensure CalPERS has not been victimized by placements agents; and
A ban on gifts to employees from business partners and potential business partners
"The Office of Enterprise Risk Management will bring together all aspects of risk management, including internal compliance operations, privacy and security, disaster recovery and business continuity programs," said Anne Stausboll, Chief Executive Officer. "We strive to be the very best at risk management. We will ensure that we ask the important questions, challenge our own assumptions, and hope to become the best at utilizing this discipline to understand and manage threats that could hamper our ability to deliver the best services to our members and employers."
The Ethics Helpline is designed to open the doors widely to those who might have information about possible instances of wrongdoing. It will operate 24 hours a day, online and on the phone. It will be operated by Ethics Point, a specialized company with a strong track record for managing similar hotlines.
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