Annual Report 2010 - Hannover Re

• Reporting to the Risk Committee and the Executive Board
that is counterparty-oriented and encompasses all the various
types of risk
• Documentation of the material elements of the system in
mandatory instructions
• Good financial strength and risk management ratings from
the rating agencies of greatest relevance to our company
The current financial strength rating from Standard & Poor’s
is “AA–” (“Very strong”, stable outlook), while the rating from
A.M. Best is “A” (“Excellent”, positive outlook). Hannover Re’s
risk management is assessed by Standard & Poor’s as “strong”,
the second-best S&P rating. This evaluation testifies to the
quality of our holistic approach to risk management.
Functions within the risk management system
The interplay of the individual functions and bodies within the
overall system is vital to an efficient risk management system.
The roles and responsibilities are clearly defined and ensure
smooth interaction.
Quantitative risk management methods
Hannover Re has developed an internal capital model for risk
quantification as a central risk management tool. The purpose
of risk quantification inter alia is to assess the capital resources
of the Hannover Re Group and its individual companies. In addition,
the model is used to establish the risk contribution made
by individual business groups and business segments to the
total company risk as well as the risk-appropriate allocation of
the cost of capital.
Central elements of the risk management system
Body/function
Supervisory Board
Executive Board
Risk Committee
Chief Risk Officer
Group Risk Management
Business units 1
Internal Auditing
Key risk management tasks
• Advising and supervising the Executive Board in its management of the company,
inter alia with respect to risk management, on the basis of the Supervisory
Board‘s Rules of Procedure
• Overall responsibility for Group-wide risk management
• Responsibility for the proper functioning of risk management
• Definition of the risk strategy
• Appointment of the Chief Risk Officer and the members of the Risk Committee
• Release and approval of new products and new business areas
Process-integrated monitoring
• Operational risk management, monitoring and coordinating body
• Decision-making power is within the bounds of the risk strategy defined by
the Executive Board
• Implementation and safeguarding of a consistent Group-wide risk management
culture
Process-integrated monitoring
• Responsibility for holistic risk monitoring across business groups (systematic
identification and assessment, control/monitoring and reporting) of all
material assets- and liabilities-side risks from the Group perspective
Process-integrated monitoring
• Holistic risk monitoring across business groups (identification, assessment,
monitoring and reporting of all material assets- and liabilities-side risks from
the company perspective)
• Methodological expertise in the development of processes and methods for
risk analysis, assessment and management as well as for risk limitation and
reporting
Process-integrated controlling
• Primary responsibility for risk identification and assessment on the departmental
level based on the guidelines of Group Risk Management
• Setting up and monitoring of the department‘s internal control system (ICS)
Process-independent monitoring
• Process-independent and Group-wide supervision on behalf of the Executive
Board
• The key aspects of the auditing tasks performed by the internal auditing
function are based upon the Rules of Procedure and department strategy
approved by the Executive Board
1 Treaty departments and service departments in the non-life and life/health reinsurance business groups as well as the investments sector
56 Management report opportunity and risk report
Hannover Re Group annual report 2010