Investment risk Investment risk is a risk to the operating result or capital from an adverse movement in the value of investment assets. A primary consideration for Agencies that invest is capital preservation. All amounts invested through TCV are guaranteed by the State. Should an Agency be holding surplus investments for a period of time pending future capital works or projects are encouraged to invest funds to match future cash flows. A specific investment policy is required for Agencies investing with VFMC or in longterm or other highrisk assets such as equities and managed funds. Investment policy statement An Investment policy statement sets out the framework for managing the Agency’s longterm or other highrisk investments. This is only applicable to Agencies with ongoing surplus investments. The statement should document the Agency’s investment policy and the approach in managing its investments. Although the statement will vary across Agencies in its detail, there is similarity in the general content to be included. The proposed content of the statement is described below. An example of an Investment Policy Statement is available in Attachment B. Introduction and overview This section covers: purpose of the Investment Policy Statement; scope of the Investment Policy Statement; reference to policies or documents relevant to the investment management function, such as investment powers in legislation and policies concerning prudent investment and financial risk management practices; and description of the position responsible for maintaining and approving the Investment Policy Statement, the process for review and amending the policy and the frequency of review of policy. Investment objectives and strategies This section outlines the investment objectives established by the Responsible Body for returns and risk that form the basis of its investment strategy and support the Agency maintaining longterm investments. Investment objectives should be set by the Responsible Body in consultation with VFMC and be consistent with the objectives of the Agency’s corporate plan. An investment strategy refers to the types of investments permitted in a portfolio and the conditions under which those investments can be varied. Roles and responsibilities The Statement commonly contains information regarding the roles and responsibilities of the parties involved in the management, control and reporting of the investment function. The parties may be some or all of the following: Responsible Body; Accountable Officer; Chief Finance Officer; Investment Committee; Investment Manager; and external consultants. Delegation of authority It should include details of what transactions and functions are delegated, to whom, who should authorise various transactions or functions, and what financial or other limits should apply. Refer to for requirements.
In setting the Agency’s business direction, it needs to describe its purpose, vision, objectives and strategies to deliver on these objectives. Purpose (Mission) specifies the overall aim of the Agency. Vision indicates what the Agency aspires to be. Agency objectives describe the effects or impacts an Agency seeks to have on its clients and the community in contributing to Government’s objectives and priorities and any legislated business objectives and directions. Objectives help the Agency focus on achievable goals and attain the best possible results from its capabilities. Objectives are typically achieved progressively over a number of years. Agency objectives should be: clear, concise and specific; strategic; results or impact focused; standard focused i.e. what the Agency wants to achieve; attributable to the Agency or more broadly to Government; and measurable/verifiable and achievable in the mediumterm. Future challenges and opportunities from analysis of both external and internal environments Analysing the external and internal factors that may affect the Agency objectives will inform planning choices. External factors can include: forecasts of economic conditions; sectorspecific inflationary pressures; longerterm changes to the drivers of demand; inconsistent/variable demand for services provided; demographic changes; anticipated technological developments; actions by other governments; and the regulatory environment. Internal factors can include: the Agency’s culture and structure; capacity to deliver; resources, including the available technology and condition of assets; physical location of service delivery providers; performance data; and clients/community, service, and operation plans. This type of information will allow an Agency to conduct risk and SWOT (strength, weakness, opportunities and threats) assessments. Strategies to meet service demands and objectives in the corporate plan period including strategies to deliver high quality/better services to Victorians at minimum cost. For Government Business Enterprises, these are to include measures to improve return on investment The next of planning is formulating strategies and developing implementation plans to deliver high quality/better services at minimum cost and meet Agency objectives over the mediumterm. Government Business Enterprises are to consider measures to improve return on investment. This should involve the whole business to ensure planning addresses key performance drivers, emerging risks, challenges and opportunities.