ANNUAL REPORT AND ACCOUNTS 2012 - RSA, Annual Report ...

RISK REVIEW
Our business success is underpinned by
our strong risk management
RISK MANAGEMENT
We manage risk to minimise losses and
take opportunities to invest appropriately
in profitable growth.
We operate under a common framework
through which risk management and control
is embedded throughout the Group.
The Board is responsible for the Group’s
Risk Management System and for defining
the Group’s risk appetite.
Executive management is responsible for
implementing systems and controls that
manage our risk exposures in line with
our risk appetite. Each Group business
is required to follow a consistent process
to identify, measure, manage, monitor
and report its risks.
The Board Risk Committee ensures
that material risks are identified and that
appropriate arrangements are in place to
manage and mitigate those risks effectively
in line with risk appetite.
GROUP RISK APPETITE
The Group risk appetite is set and monitored
at a Group, regional and business level, is
reviewed annually, approved by the Board
Risk Committee and signed off at the Group
Board. It sets business volumes for certain
higher risk insurance classes, stipulates loss
retention limits, reinsurance protection,
targets for credit rating and solvency margins.
RISK FRAMEWORK
The Group operates a ‘three lines of
defence’ model for the oversight and
management of risk as follows:
1st line – Management
• Delivering the business plan within
risk appetite
• Accountable for implementing and
using the Risk Management System
• Embedding an appropriate risk culture.
2nd line – Risk oversight
• Development and maintenance of a
Risk Management System within which
the Group policies and minimum
standards are set
• Oversight and challenge across
the Group.
3rd line – Independent assurance
• Providing independent and objective
assurance of the effectiveness of the
Group’s systems of internal control
established by the first and second
lines of defence.
GROUP RISK POLICY STATEMENTS
Our policy statements set out the minimum
standards to be maintained by the Group’s
operations to manage their risks in a way
that is consistent with the risk appetite.
RISK CATEGORIES
Risks are viewed under categories that broadly
correspond to those used in the Financial
Services Authority’s Prudential Sourcebook for
Insurers (INSPRU) and Senior Management
Arrangements, Systems and Controls (SYSC).
Additional information is provided in the Risk
Management section on page 92. Some of the
key current practices and tools for each risk
category are set out overleaf alongside
our risks and uncertainties.
Governance structure – the principal committees are shown below
BOARD
BOARD RISK
COMMITTEE
GROUP
INVESTMENT
COMMITTEE
GROUP AUDIT
COMMITTEE
CONTROL &
GOVERNANCE
ADVISORY
COMMITTEE
GROUP
EXECUTIVE
COMMITTEE
GROUP ASSET
MANAGEMENT
COMMITTEE
REGIONAL AUDIT
COMMITTEES
REGIONAL
RISK COMMITTEES
GROUP
RESERVING
COMMITTEE
GROUP
TRANSACTION
COMMITTEE
GROUP RISK,
INVESTMENTS
& TREASURY
COMMITTEE
GROUP
REINSURANCE
CREDIT
COMMITTEE
GROUP
DISCLOSURE
COMMITTEE
ICA & CAPITAL
ALLOCATION
STEERING GROUP
CAPITAL
MANAGEMENT
COMMITTEE
SOLVENCY II
STEERING
COMMITTEE
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