The Caisse de dépôt et placement du Québec’s chief executive officer Michael Sabia is putting his stamp on the giant pension fund manager, announcing a renewed focus on risk management and a streamlined staff.
Sabia has added 24 positions to the Caisse’s risk management team—doubling its size—and appointed Susan Kudzman as chief risk officer. Elsewhere, 55 positions have been eliminated, including Michael Malo, head of hedge funds; chief strategist Christian Pestre; and the head of equity markets, François Grenier.
“The Caisse has to adapt to the current reality of financial markets, which are very different from those of recent years, and which translates into a lower level of activity in certain sectors, more volatile markets and more demanding risk management,” Sabia said.
He explained that the new approach incorporates “lessons learned from the ABCP crisis and the financial crisis” and is based on four key components:
• development of new risk management practices to deal with unforeseeable circumstances;
• optimization of the approval process for new operations;
• refinement of risk measures and methodologies; and
• strengthening of the risk management culture
The Caisse was pounded by equity markets in 2008 along with heavy exposure to the asset-backed commercial paper market, culminating in an unprecedented 25% loss in assets, the worst of any large Canadian pension fund. Sabia’s controversial appointment as CEO in early 2009 also raised questions about the hiring process and his suitability for the position.