| Insurance |
The risk that arises from the
inherent uncertainties as to
the occurrence, amount and
timing of insurance liabilities.
Such risks arise as a result of, for
example, increases in annuitant
life expectancy, deteriorating
expense experience or variation in
persistency experience
|
- Longevity
- Persistency
- Morbidity/mortality -
assurances
- Expenses
|
- Regular reviews of experience
- Reinsurance and risk transfer
- The business planning process
- Specified underwriting limits
- Testing of claim values,
reinsurance recoveries, and the
survival of annuitants
|
| Credit |
The risk of exposure to loss if
counterparty fails to perform
its financial obligations,
including failure to perform
those obligations in a timely
manner. It also includes the risk
of a reduction in the value of
corporate bonds due to widening
of corporate bond spreads |
- Counterparty/bond
default
- Spread widening
- Concentration of
exposure
|
- Regular monitoring of risk
exposures to ensure that risks
remain within approved risk
appetite
- Specific limits on counterparty
exposure, based on credit
rating, approved by the Board
- Group companies establish
and maintain adequate
controls to manage exposure
within these specified limits
|
| Market |
The risk that as a result of market
movements the Group may be
exposed to fluctuations in the
value of their assets, the amount
of their liabilities or the income
from their assets |
- Equity and property risk
- Interest rate risk
- Foreign currency risk
|
- Investment benchmarks, and
risk tolerances around these
benchmarks, set regularly for
each major liability based on
the nature of that liability to
ensure that risk remains within
Group's appetite
- Regular monitoring of asset
mixes and the exposure of the
Group companies to market
risk to ensure that they remain
within the above tolerances
- Limits for foreign currency set
by the Board
|
| Liquidity |
Risk that the Group or individual
Group companies, although
solvent, do not have sufficient
financial resources available to
meet their obligations as they
fall due |
- Diversification of
funding sources
- Quality of funding
sources
- Depth and liquidity of
particular markets
|
- Group companies have
established contingency
funding plans which are
reviewed on a regular basis
- Regular monitoring of
exposure to liquidity risk to
ensure they remain within
agreed tolerances
|
| Operational |
Risk of loss or adverse
consequences for the business,
resulting from inadequate or
failed internal processes, people
and systems, or from external
events |
- Fraud or irregularities
- Regulatory or legal
- Customer treatment
- Business interruption
- Supplier failure
- Planning
- Process execution
- People
|
- Regular risk assessment
process to identify key risks
- Identify strategy or risk
response to risk exposures
- Limits for foreign currency set
by the Board
- Regular assessment of
control adequacy by business
managers
- Review quantitative measures
against defined thresholds
|
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