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ITEM 7 / ENTERPRISE RISK MANAGEMENT.....................................................................................................................................................................................Enterprise Risk ManagementAt AIG, risk management includes the identification and measurement of various forms of risk, the establishment ofrisk thresholds and the creation of processes intended to maintain risks within these thresholds while optimizingreturns. We consider risk management an integral part of managing our core businesses and a key element of ourapproach to corporate governance.OVERVIEW.............................................................................................................................................................. Enterprise eRiskManagement age e(ERM)At AIG, we have an integrated process for managing risks throughout ourorganization in accordance with our firm-wide risk appetite. Our Board of• Our ERM framework providesDirectors has oversight responsibility for the management of risk. Oursenior management with aEnterprise Risk Management (ERM) Department supervises and integratesconsolidated view of our riskthe risk management functions in each of our business units, providing senior appetite and major riskmanagement with a consolidated view of the firm’s major risk positions. Within positions.each business unit, senior leaders and executives approve risk-taking policiesand targeted risk tolerance within the framework provided by ERM. ERM• In each of our business units,supports our businesses and management in the embedding of enterprise risk senior leaders and executivesmanagement in all of our key day to day business processes and inapprove risk-taking policiesidentifying, assessing, quantifying, managing and mitigating the risks taken by and targeted risk toleranceus and our businesses.within the ERM frameworkwhile working with AIG ERM toRisk Governance Structuremitigate risks across the firm...............................................................................................................................................................• Risk management is anOur risk governance fosters the development and maintenance of a risk integral part of how weand control culture that encompasses all significant risk categories.manage our core businesses.Accountability for the implementation and oversight of risk policies isaligned with individual corporate executives, with the risk committeesreceiving regular reports regarding compliance with each policy tosupport risk governance at our corporate level as well as in eachbusiness unit.Our Board of Directors oversees the management of risk through its Finance and Risk Management Committee (theFRMC) and the Audit Committee. Those committees regularly interact with other committees of the Board. OurExecutive Vice President (EVP) and Chief Risk Officer (CRO) reports to both the FRMC and AIG’s Chief ExecutiveOfficer (CEO).The Group Risk Committee (the GRC) is the senior management group charged with assessing all significant riskissues on a global basis in order to protect our financial strength, optimize our intrinsic value, and protect ourreputation among key stakeholders. The GRC is chaired by our CRO. Its membership includes our CEO, EVP andChief Financial Officer (CFO), EVP and General Counsel, and 12 other executives from across our corporatefunctions and business units. Our CRO reports periodically on behalf of the GRC to both the FRMC and the AuditCommittee of the Board.Management committees that support the GRC are described below. These committees are comprised of seniorexecutives and experienced business representatives from a range of functions and business units throughout AIGand its subsidiaries. These committees are charged with identifying, analyzing and reviewing specific risk matterswithin their respective mandates.Financial Risk Group (FRG): The FRG is responsible for the oversight of financial risks taken by AIG and itssubsidiaries. Its mandate includes overseeing our aggregate credit, market, interest rate, liquidity and model risks, aswell as asset-liability management, derivatives activity, and foreign exchange transactions. Membership of the FRGincludes our EVP – Investments, EVP and Treasurer, as well as our EVP and CFO, and other senior executives fromFinance and ERM. Our CRO serves as Chair of the FRG...................................................................................................................................................................................................................................AIG 2012 Form 10-K 155
ITEM 7 / ENTERPRISE RISK MANAGEMENT.....................................................................................................................................................................................Transaction Approval and Business Practices Committee (TABPC): TABPC provides the primary corporatelevelreview function for all proposed transactions and business practices that are significant in size, complex inscope, or that present heightened legal, reputational, accounting or regulatory risks. Our EVP and Treasurer servesas TABPC Chair and additional members include our EVP and General Counsel, EVP and CRO, EVP and CFO,EVP – Investments, and a senior executive from Finance.Operational Risk Committee (ORC): This Committee is tasked with overview of the enterprise-wide identification,escalation and mitigation of risks that may arise from inadequate or failed internal processes, people, systems, orexternal events. The Committee approves AIG’s Operational Risk Management (ORM) framework and relatedpolicies, which includes the risk and control self assessment (RCSA), Risk Events, Key Risk Indicators (KRIs) andScenario Analysis. The Committee monitors the adequacy of ORM staffing and ensures applicable governancestructures are established to provide oversight of operational risk at each Business Unit and Corporate Function. TheORC also reviews aggregate firm-wide operational risk reports. Our Chief Administrative Officer is Chair of the ORCand our Head of Operational Risk Management serves as ORC Secretary. Other ORC members include senior AIGexecutives with expertise in legal, compliance, technology, finance and operational risk, as well as businesscontinuity management and the chief risk officers of our business units.Group Risk Committee (GRC)Chair: EVP and AIG Chief RiskOfficerFinancial Risk Group (FRG)Chair: EVP and AIG Chief RiskOfficerTransaction Approval &Business Practices Committee(TABPC)Chair: EVP and TreasurerOperational Risk Committee(ORC)Chair: EVP and ChiefAdministrative OfficerBusiness Unit Risk & CapitalCommittees (BU RCCs)(AIG PC, AIG L&R, UGC)15FEB201318003640Business Unit Risk Committees: Each of our major insurance businesses has established a risk and capitalcommittee (BU RCC) that serves as the senior management committee responsible for risk oversight at the individualbusiness unit level. The BU RCCs are responsible for the identification, assessment and monitoring of all sources ofrisk within their respective portfolios. Specific responsibilities include setting risk tolerances, approving capitalmanagement strategies (including asset allocation and risk financing), insurance portfolio optimization, riskmanagement policies and providing oversight of economic capital models. In addition to its BU RCC, each majorinsurance business has established subordinate committees which identify, assess and monitor the specificoperational, transactional and financial risks inherent in its respective business. Together, the BU Risk Committeesand AIG Risk Committees described above provide comprehensive risk oversight throughout the organization.Risk oversight activities also continue to be coordinated with discontinued operations, such as ILFC, until pendingsale transactions are closed.Risk Appetite, Identification, and Measurement..............................................................................................................................................................................................ERM has developed a company-wide Risk Appetite Statement (RAS), which will be updated on at least an annualbasis. By formally defining our risk appetite, we seek to integrate stakeholder interests, business goals and availablefinancial resources through taking measured risks that are intended to generate repeatable, sustainable earnings andproduce long-term value and stability.The RAS articulates our risk-taking capacity by setting consolidated capital and liquidity tolerances as observedunder expected and stressed business and economic conditions. RAS also reflects constraints on minimum capitalpositions for our insurance operations. These constraints inform the requirements for capital adequacy for individualbusinesses, based on capital assessments under rating agency, regulatory and other business needs. Consistentwith our risk appetite, we have established risk tolerances that are reflected in our business planning and areintegrated into the management of our operations. Risk tolerances cover insurance company capital ratios as well asmetrics associated with AIG Parent resources, including consolidated company capital ratios and parent liquidity. OurGRC routinely reviews the level of risk taken by the consolidated organization in relation to established risktolerances. A consolidated risk report is also presented to the FRMC by our CRO...................................................................................................................................................................................................................................156 AIG 2012 Form 10-K
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American International Group, Inc.2
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KEY FACTS & FIGURES52,000+ $65.7 bi
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■We said we would return to profi
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Financial HighlightsYears Ended Dec
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~63,000AIG EMPLOYEES AROUND THE WOR
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$115.1 millionAVERAGE CLAIMS PAID E
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$10,000MAXIMUM DONATION MADE BY AIG
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American International Group, Inc.F
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AMERICAN INTERNATIONAL GROUP, INC.A
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ITEM 1 / BUSINESS / AIG............
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ITEM 1 / BUSINESS / AIG............
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ITEM 1 / BUSINESS / AIG PROPERTY CA
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ITEM 1 / BUSINESS / AIG PROPERTY CA
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ITEM 1 / BUSINESS / AIG LIFE AND RE
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ITEM 1 / BUSINESS / OTHER OPERATION
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ITEM 1 / BUSINESS / OTHER OPERATION
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ITEM 1 / BUSINESS..................
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ITEM 1 / BUSINESS..................
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ITEM 1 / BUSINESS..................
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ITEM 1 / BUSINESS..................
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ITEM 1 / BUSINESS..................
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ITEM 1A / RISK FACTORS.............
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ITEM 1B / UNRESOLVED STAFF COMMENTS
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ITEM 5 / MARKET FOR REGISTRANT’S
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ITEM 6 / SELECTED FINANCIAL DATA...
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ITEM 6 / SELECTED FINANCIAL DATA...
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ITEM 7 / MANAGEMENT’S DISCUSSION
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ITEM 7 / USE OF NON-GAAP MEASURES..
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ITEM 7 / EXECUTIVE SUMMARY.........
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ITEM 7 / RESULTS OF OPERATIONS.....
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Page 219 and 220: ITEM 8 / INDEX TO FINANCIAL STATEME
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AMERICAN INTERNATIONAL GROUP, INC.C
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AMERICAN INTERNATIONAL GROUP, INC.C
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ITEM 8 / NOTE 1. BASIS OF PRESENTAT
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ITEM 8 / NOTE 2. SUMMARY OF SIGNIFI
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ITEM 8 / NOTE 3. SEGMENT INFORMATIO
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ITEM 8 / NOTE 3. SEGMENT INFORMATIO
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ITEM 8 / NOTE 4. DIVESTED BUSINESSE
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ITEM 8 / NOTE 4. DIVESTED BUSINESSE
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ITEM 8 / NOTE 5. BUSINESS COMBINATI
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ITEM 8 / NOTE 6. FAIR VALUE MEASURE
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ITEM 8 / NOTE 7. INVESTMENTS.......
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ITEM 8 / NOTE 8. LENDING ACTIVITIES
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ITEM 8 / NOTE 9. REINSURANCE.......
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ITEM 8 / NOTE 10. DEFERRED POLICY A
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ITEM 8 / NOTE 10. DEFERRED POLICY A
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ITEM 8 / NOTE 11. VARIABLE INTEREST
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ITEM 8 / NOTE 11. VARIABLE INTEREST
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ITEM 8 / NOTE 12. DERIVATIVES AND H
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ITEM 8 / NOTE 13. LIABILITY FOR UNP
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ITEM 8 / NOTE 14. VARIABLE LIFE AND
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ITEM 8 / NOTE 15. DEBT OUTSTANDING.
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ITEM 8 / NOTE 15. DEBT OUTSTANDING.
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ITEM 8 / NOTE 16. CONTINGENCIES, CO
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ITEM 8 / NOTE 17. TOTAL EQUITY.....
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ITEM 8 / NOTE 18. NONCONTROLLING IN
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ITEM 8 / NOTE 19. EARNINGS (LOSS) P
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ITEM 8 / NOTE 20. STATUTORY FINANCI
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ITEM 8 / NOTE 21. SHARE-BASED COMPE
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ITEM 8 / NOTE 21. SHARE-BASED COMPE
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ITEM 8 / NOTE 22. EMPLOYEE BENEFITS
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ITEM 8 / NOTE 24. INCOME TAXES.....
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ITEM 8 / NOTE 26. QUARTERLY FINANCI
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ITEM 8 / NOTE 27. INFORMATION PROVI
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PART II............................
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PART IV............................
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SignatureTitle/s/ ARTHUR C. MARTINE
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ExhibitNumber Description Location(
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Condensed Financial Information of
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Condensed Financial Information of
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Notes to Condensed Financial Inform
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Supplementary Insurance Information
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Valuation and Qualifying AccountsFo
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Subsidiaries of RegistrantExhibit 2
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Percentageof VotingSecuritiesJurisd
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Percentageof VotingSecuritiesJurisd
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CONSENT OF INDEPENDENT REGISTERED P
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CERTIFICATIONSI, Robert H. Benmosch
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CERTIFICATIONExhibit 32In connectio
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SECURITIES REGISTERED PURSUANT TO S
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American International Group, Inc.1
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