Review
Risk management
Developments in risk governance and risk management processes
Risk governance and reporting structure
During the year the structure for the governance and reporting of risk has been amended in line with the reorganisation of the Group’s operations. Also, as the new risk system is adopted, we have clearly recognised the role played by operational management within the risk framework at the divisional level. The amended governance structure is shown below.
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Framework development
In 2008 the existing risk management framework was reviewed, with the new arrangements approved by the Risk Committee and Audit Committee in May.
The process of risk identification and analysis has been carried out within the Group for many years, but the process employed had become unnecessarily complicated and a new top down approach designed in 2007 is currently being implemented. This new approach re-defines all Group risks into the categories set out on the previous page with event, cause and effect all clearly defined. The potential cost of loss for each risk is being evaluated on a ‘normal’ and extreme loss scenario basis prior to the successful effect of management controls.
With risks identified, the next stage is to capture the detail of all controls, and to assess their effectiveness of design (what impact do they have on the risk) and performance (how regularly and fully are they carried out).
From the work carried out to date, it is apparent that a strong risk control framework is in operation within the Group and that the principal impact of the new risk framework development project will be to improve on transparency, accountability, reporting, and in the provision of a structure which can be more easily audited. It will also ensure that there is an ability to consolidate and report risk at a Group level.
From November 2008 onwards the new framework and supporting risk reporting system is being implemented in Amlin London, with particular focus on underwriting and claims. We expect the roll out to be completed for all UK operations by the end of 2009.
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