CPPIB changes tack on risk officer

The Canada Pension Plan Investment Board, which stood apart from other major pension plans and Canadian financial institutions because it didn’t have a chief risk officer, appears to have had a change of heart.

Neil Beaumont, who was most recently vice-president of Finance Minerals America for BHP Billiton, will become chief financial and risk officer at CPPIB on July 24.

Beaumont will take over some functions from Benita Warmbold, who is retiring, but adds duties to reflect the pension fund’s “continued focus on rigorous risk management across the organization.”

The appointment comes a little more than a year after Mark Machin became chief executive of CPPIB.

Jason Mercer, an analyst at Moody’s Investors Service, was among the critics of CPPIB’s trend- bucking decentralized model of risk management.

He argued that a chief risk officer has a critical role in balancing operations and risk, by playing devil’s advocate to other senior members of management who take risks to achieve business objectives.

Mercer suggested that this position, a staple at an increasing number of banks, pensions and i nsurance companies since the financial crisis of 2008, provides comfort to stakeholders that risks facing the organization are being overseen independently.

CPPIB had deflected such criticism, and an official told the Financial Post last fall that the pension organization had created a framework that didn’t rely on a single executive to monitor risks. The decentralized enterprise risk- management system gave i ndividuals closest to the risks, and best equipped to exercise judgment, local ownership over management of those risks, he said.

The establishment of a senior risk officer position was announced Wednesday, along with other executive changes.

Graeme Eadie will step back from his role as global head of real assets on July 15, a role which will be assumed by Ed Cass, who was chief investment strategist.

Geoffrey Rubin, who was head of portfolio construction and research, will take the chief strategist job, joining CPPIB’s senior management team. Before joining CPPIB in 2011, Rubin held finance roles at Fannie Mae and Capital One Financial.

“The appointments demonstrate the deep pool of world-class talent we have at CPPIB, and reflect our succession planning and ability to recruit top talent,” Machin said in statement.

He said Eadie, who has been with CPPIB f or 12 years, will “continue to provide valuable guidance and continuity,” while stepping back to a general management role with a focus on investment approval processes.