Risk Management - Libyan Investment Authority

Strengthening the protection of LIA ‘s assets

Risk management framework

Risk is an integral part of any investment process, and it is represented by uncertainty, and it is measured according to its probability of occurrence and the potential effects if it occurs.

The Libyan Investment Authority is charged with protecting and developing the wealth of the Libyan people for the benefit of future generations. To achieve this, we must proactively manage risks.

We are aware of the importance of comprehensive risk management to identify and analyze all types of risks in different asset classes, as well as ensure that any potential problems are mitigated and managed efficiently.

We are committed to adopting a strategy that includes the identification, measuring, monitoring and reporting of key risks. This strategy harnesses the information gathered during this process to enhance LIA‘s decision-making.

Our investment approach is based on a solid risk management framework, which is based on the “three lines of defense” model.

Three Lines of Defence

Board of directors of LIA

Responsible for the approval of incestment policy & risk tolerance

Committee of Audit, Risk & Compliance

Oversight & supervision on the efficiency of the three defense lines model

Risk Management

  • 1ST
    LINE

    Day to day operations

    Putting in place a framework for oversight on the level of sections.

  • 2ND
    LINE

    Oversight Missions

    Strategic management: put in place policies & procedures & staff oversight.

    • 1ST
      LINE

      Day to day operations

      Putting in place a framework for oversight on the level of sections.

    • 2ND
      LINE

      Oversight Missions

      Strategic management: put in place policies & procedures & staff oversight.

    • 3RD
      LINE

      AUDIT

      Submission of audit & independent guarantess.

      3rd
      LINE

      AUDIT

      Submission of audit & independent guarantess.


      In general, we strive to achieve stable long-term financial returns within an accurate framework.

      Our investment decisions emanate from our economic objectives, as stipulated in Law No. 13 and our obligations under United Nations Security Council Resolutions 1970, 1973, 2009 of 2011.

      Our Approach to Risk


      We are enhancing our risk management approach through a continuous focus on risk awareness throughout our Authority.

      We also focus on maximizing our ability to achieve the strategic objectives of LIA, promoting sound decision-making, and protecting LIA and its employees.

      Risk measurement tools

      LIA risk management depends on global measurement tools through which the best results are obtained, namely:
      • VAR- Value at Risk
      • Concentration Risk
      • Volatility & Correlation Risk
      • Standard Deviation

      RISK GOVERNANCE

      The Board of Directors has complete control and supervision over the risk framework and risk-return objectives, whereas the Authority’s Audit, Risk and Compliance Committee is responsible for monitoring and evaluating the effectiveness of the risk management framework, policies and practices.

      RISK CULTURE

      All LIA employees play an important role in maintaining an appropriate risk environment. We are committed to providing training and development to our employees regarding risk management, and we expect them to embody the highest standards of ethics, integrity and professionalism.

      RISK APPETITE

      Our investment decisions give priority to long-term decisions, while adhering to our established laws and adopting international best practices. The amounts and types of risks that LIA can take in order to achieve its strategic objectives are specified in the LIA’s Risk Appetite Statement.
      • RISK GOVERNANCE

        The Board of Directors has complete control and supervision over the risk framework and risk-return objectives, whereas the Authority’s Audit, Risk and Compliance Committee is responsible for monitoring and evaluating the effectiveness of the risk management framework, policies and practices.
      • RISK CULTURE

        All LIA employees play an important role in maintaining an appropriate risk environment. We are committed to providing training and development to our employees regarding risk management, and we expect them to embody the highest standards of ethics, integrity and professionalism.
      • RISK APPETITE

        Our investment decisions give priority to long-term decisions, while adhering to our established laws and adopting international best practices. The amounts and types of risks that LIA can take in order to achieve its strategic objectives are specified in the LIA’s Risk Appetite Statement.

        Types of risk


        The main risks are divided into two categories: investment risks and institutional risks. Each category is divided into several branches and types. Definitions and sources of each type of risk are defined.
        culture of risks
        Enterprise risks
        investment risks
        Operational risks
        Information security risks
        Business Continuity risks
        market risks
        Counterparty risks
        Liquidity risks
        credit risks
        ENTERPRISE RISKS
        • OPERATIONAL RISKS
        • INFORMATION SECURITY RISKS
        • BUSINESS CONTINUITY RISKS
        INVESTMENT RISKS
        • MARKET RISKS
        • COUNTERPARTY RISKS
        • LIQUIDITY RISKS
        • CREDIT RISKS
        • ENTERPRISE RISKS
          • OPERATIONAL RISKS
          • INFORMATION SECURITY RISKS
          • BUSINESS CONTINUITY RISKS
        • INVESTMENT RISKS
          • MARKET RISKS
          • COUNTERPARTY RISKS
          • LIQUIDITY RISKS
          • CREDIT RISKS

          © 2021 LIA,  ALL RIGHTS RESERVED.

          © 2021 LIA,  ALL RIGHTS RESERVED.