The Caisse de dépôt et placement du Québec says it will cut 31 jobs as it accelerates organizational changes aimed at streamlining the pension fund manager and managing risk more effectively.

"The Caisse must adapt to the current reality of the financial markets, which is very different from that of recent years and whose impacts include a decrease in activity in some areas, more volatile markets and more stringent risk management," CEO Michael Sabia said in a release Thursday.

The value of the pension fund's assets fell almost $40 billion in 2008, prompting the Quebec government to call top officials before a special legislative committee to explain the biggest loss in its history.

Sabia said the Caisse has made risk management its top priority and is speeding up implementation of the three-year development plan adopted by the board of directors in 2008. The timetable has been reduced to 18 months, with most of the priority projects to be completed by the end of 2009.

"The plan builds on the progress made in risk management in recent years, incorporates lessons learned from the [asset-backed commercial paper] crisis and the financial crisis and is forward-looking," he said.

As part of the reorganization, 55 positions will be abolished and 24 new ones will be created, mainly in risk management. The Caisse had 813 employees as of Dec. 31.

In the wake of the global financial crisis, many investment operations have been affected by a drop in activity, notably hedge funds, Sabia said. Therefore the Caisse has decided to combine all investment operations involving liquid markets into two departments: equity markets, and fixed income and currencies.

As a result, the position of executive vice-president, hedge funds, has been eliminated, and staff has been reduced. The Caisse is also eliminating the position of executive vice-president and chief strategist.

Normand Provost has been named chief operating officer, in addition to his job as executive vice-president, private equity.