Review

Risk management – effectively understanding and governing risk

James Illingworth Chief Risk Officer

  • Progress with Enterprise Risk Management capability has been significant in 2007.
  • Group wide economic modelling now able to assist in risk and return evaluation.
  • Development of an improved risk appetite framework and the mechanism for risk reporting is a key aim for 2008.
Key performance indicators
  • Claims ratio of 36% favourably compares to expectation of 55%
  • Maximum RDS represents 89% of risk appetite

The management of risk is a core skill that ensures that the Group offers both sustainable risk transfer solutions to its clients and attractive returns to shareholders.

In a dynamic market place where levels of risk are fluctuating, competition for business is variable and financial security critical, the maintenance of ever improving risk evaluation and monitoring techniques is an ongoing challenge. This can clearly be seen in the management of our underwriting through the cycle and the adoption of improving technical underwriting methods.

The management and identification of risk is a day to day responsibility of many of our staff and is a feature of all our business activities.

The Risk Assessment and Monitoring team (RAM) are responsible for the evaluation, analysis and monitoring of the major risks faced by the Group. Under a Chief Risk Officer, the team includes actuarial, compliance, business intelligence, insurance and risk management skills. The purpose of the team is to promote better understanding and governance of risk, to ensure that we operate within agreed risk appetites and to monitor economic capital requirements.