The risk management process is integrated into the culture of
the Group and is led by the Group Management Board (GMB), which is
supported by three Executive Risk Management Committees:
-- The (Non-Life) Insurance Risk Committee which has oversight
of the non-life insurance risks of the Group including counterparty
risk
-- The Investment and Market Risks Committee which has oversight
of the investment and market risks of the Group
-- The Group Operational Risk Committee which has oversight of
the operational risks of the Group.
The risk management process supports accountability, performance
measurement and reward, thus promoting operational efficiency at
all levels.
On an annual basis the GMB identifies key strategic risks and
allocates responsibility for each of them. Any risk management
actions that arise are regularly monitored.
The key to the success of this process is the deployment of a
strong Three Lines of Defence Model whereby:
-- The first line (Business Management) is responsible for
strategy, performance and managing risks arising;
-- The second line (Reporting, Oversight and Guidance) is
responsible for establishing minimum standards, appropriate
reporting, oversight and challenge of our risk profiles and risk
management activities within each of our businesses. This includes
Executive Risk Management Committees and is subject to oversight
and challenge by the Group Risk Committee; and
-- The third Line (Assurance) provides independent and objective
assurance of the effectiveness of the Group's systems of internal
control. This activity principally comprises the Internal Audit
function which is subject to oversight and challenge by the Group
Audit Committee.
We have a continuously evolving approach to Enterprise Risk
Management and use emerging experience to refine our approach.
During 2014 key improvements included:
-- Strengthening of the Risk function with increased technical
knowledge and actuarial capability;
-- Improved embedding of the risk framework within the first
line of defence which included establishing local risk
committees;
-- Commencement of risk oversight visits that are being
conducted by the second line;
-- Enhancement of the qualitative risk profiles including an
increased focus on business plans and emerging risks;
-- Continued development of quantitative risk profiling
capabilities;
-- A refreshed Group-wide risk appetite proposal which was
approved by the Group Risk Committee, and included strategic
business units' (SBUs) risk appetites;
-- Improved reporting to the Group Risk Committee; and
-- Refinements to the Own Risk Solvency Assessment (ORSA)
process which were approved by the Board and submitted to the
Prudential Regulatory Authority (PRA).
Risk appetite
The risk appetite defines the level of risk-taking that the
Board feel is appropriate for the Group as we pursue our business
objectives. It has been defined in line with the different
categories of risk that the Group faces, and provides the backdrop
against which the business plan is developed and validated. This
ensures that the risk profile resulting from the business plan is
in line with the risk-taking expectations of the Board. Compliance
with the risk appetite is reported to the Group Risk Committee at
each meeting. A formal escalation process exists for activities
outside of risk appetite.
The risk appetite is refreshed annually and is signed off and
approved by the Board.
The principles that underpin our risk appetite are based on the
overall ambition of Ecclesiastical to operate as an independent and
successful financial services group, operating with the highest
standards of integrity to deliver financial products and services
for the benefit of the church and community. As such, the Board
takes the reputation of the Group seriously and will not undertake
any activity whose outcome might reasonably be expected to have a
sufficiently negative reputational impact on the Group and
undermine the sustainability of the business model.
At the highest level of our risk appetite there are strategic
statements which set the minimum levels of capital and solvency
that the Group wishes to maintain, and they contain broad ranges of
the magnitude of exposure to different risk types that are
desirable. This includes limits on the type, nature, size and
concentration of insurance risks that will be accepted by the Group
together with the Board's requirements for a Group-wide reinsurance
strategy. We purchase reinsurance cover to protect against property
catastrophe events that are predicted to occur once every 250 to
500 years, depending upon the territory.
A key objective of our risk appetite is to ensure that we have
sufficient capital to meet our liabilities in extreme adverse
scenarios. The risk appetite aims to achieve and support a credit
rating of at least single A minus from Standard & Poor's
(S&P) and A.M. Best.
Quantitative risk measures and stress testing framework
The primary tool used to measure aggregate risk is our internal
model, which has been calibrated to estimate the capital resources
required to deliver our business plan and meet UK regulatory
risk-based capital requirements.
Over the last year we have improved both the scope and
methodology of our internal model to better reflect the risk
profile. The model has become further embedded in our strategic
decision-making processes. For example, the internal model was used
to inform the setting of the refreshed risk appetite and as an
input to the development of our reinsurance strategy and pricing
decisions.
We have continued to refine a comprehensive stress testing and
scenario analysis framework to complement our quantitative risk
measures and meet regulatory requirements.
This framework seeks to stress the business plan and identifies
potential outcomes generated in the scenarios other than those in
the central plan assumptions, providing evidence to the Board that
the plan is robust. This is also used to identify additional
actions that can be taken, including contingency plans, to mitigate
any risks or potential adverse experiences identified. As such the
Group uses stress and scenario testing as a key component of its
business planning process.
Principal risks
The following table shows the principal risks we face that could
have the highest potential to damage our Group both in the short
and long term.
Principal Risks
----------------
Risk type and description Why we have it How we mitigate it
-------------------------------------- -------------------------------------- --------------------------------------
Insurance Risks General insurance is a highly Disciplined underwriting and pricing
Business mix, underwriting and competitive business. The premium is central to our business and key
pricing risk required for an insurance to the success of
The risk of failing to price policy needs to reflect the cover the Group. Since 2010 we have
adequately for claims costs, provided and the risk factors established sales, claims and
expenses, cost of capital and profit present. underwriting academies to support
requirements; failure to manage these activities and to ensure the
portfolio risk; failure to manage correct skill set is maintained and
the underwriting cycle; developed. Significant
diversification and concentration; investment in underwriting and
failure to establish appropriate pricing capabilities across the
underwriting disciplines. Group has continued into 2014,
and a revised structure has been
implemented within the UK general
insurance business. A strict
risk appetite has been adopted to
ensure there is a clear focus on our
chosen niches and classes
of business. Concentration risk is a
key consideration and limits are
established within the
risk appetite.
The size of this risk has fallen
over the year due to underwriting
actions taken to improve
the quality of the business we write
coupled with the investment in our
underwriting capabilities.
-------------------------------------- -------------------------------------- --------------------------------------
Claims reserving risk Claims reserving risk is a natural Claims development and reserving
Grafico Azioni Ecclesiastl.8fe (LSE:ELLA)
Storico
Da Dic 2024 a Gen 2025
Grafico Azioni Ecclesiastl.8fe (LSE:ELLA)
Storico
Da Gen 2024 a Gen 2025
