US public pensions failing on operational risk

Outdated systems and lax controls expose pension plans to 'operational failure'

Red warning light

It sounds like an operational risk manager's worst nightmare.

As recently as 2003, the State Employees' Retirement System of Illinois was printing paper cheques to transfer funds between the state treasury and the bank accounts used to pay retirement benefits. At one point, the plan's accountant had paper cheques totalling almost $1.7 billion on his desk.

"We had a batch of seventeen $99 million cheques, because the system couldn't generate anything higher than that," says Tim Blair, director of

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