The risk management departments advise on risk management and report on the risk profile in order to promote efficiency and uniformity. They act as shared service centres for the Banking and Insurance activities and, with regard to the risks, they are responsible for modelling, measuring, monitoring, reporting and advising. They are not responsible for determining the policy, but have an advisory role.
This advisory role does not only entail a supporting role in setting up and implementing policy, but also a role monitoring quality of risk control.
SNS REAAL has the following risk management departments in place:
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Group Risk Management (GRM)•
Group Actuarial department and BU Actuarial departments•
Compliance, Security & Operational Risk Management (CS&O)•
Legal Affairs (LA)•
Insurance Treasury & Investment Management (IT&IM)•
Group Audit (GA)Group Risk Management (GRM)
GRM supports the Executive Board and the management boards in:
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Identifying changing market conditions and regulations that are relevant to the strategy and policy;•
Determining the desired risk profile and translating it into internal standards and limits;•
Choosing products and services that correspond with the desired risk profile;•
Valuation of portfolios for steering structural value creation;•
Determining the prices of products and services on the basis of risk-weighted return;•
Structuring and implementing asset & liability management for the Group and the Banking and Insurance activities;•
Structuring and implementing the capitalisation and funding policies;•
Portfolio management and modelling credit risk and insurance risks;•
Setting frameworks for drawing up models and techniques used and independent implementation of model validation;•
Implementing the reinsurance policy;•
Coordinating strategic projects related to the management of financial risks, including stress test, Basel III and Solvency II programmes.Group Actuarial department and BU Actuarial departments
The actuarial duties are allocated across Group Actuarial Risk Management within GRM and the actuarial departments of REAAL and Zwitserleven. Group Actuarial Risk Management’s areas of attention include drawing up policies, drawing up standards and frameworks, and monitoring the risk/return ratio. Data are also consolidated and reported to the
various parties involved. Important focal points are the supervisory role and advising on developments to the Group and the business. In addition, GRM fleshes out the areas of attention pertaining to Reinsurance and Economic Capital: drawing up policies and frameworks, modelling, implementing and monitoring/advising.
The operational actuarial duties are vested in the actuarial departments of REAAL and Zwitserleven. Besides reporting, the duties are modelling and carrying out analyses, providing the business with advice on insurance risk management and implementing the adopted policies.
The Insurance activities manage their insurance risk using a system of procedures and criteria for product development and acceptance. Risks that do not meet the criteria or risks that exceed pre-set limits – if accepted – are transferred to a reinsurance company as much as possible.
A panel consisting of representatives of the management boards of the Insurance activities, the Finance & Control department and the Actuarial department regularly monitor the portfolio’s development. For life Insurance activities, this includes monitoring developments in expenses, interest and turnover.
Compliance, Security & Operational Risk Management (CS&O)
CS&O advises the Executive Board and the management boards of the business units on the control of non-financial risks. These are the risks that are related to human behaviour and the structure of the business processes. The main duties of the department are providing recommendations for ethical and controlled business conduct, and coordinating and promoting operational risk management, security risk management and integrity risk management, formulating policies, monitoring the functioning of processes and reporting in this respect.
The scope of non-financial risks is divided into seven themes: employee, client, business process, product, information, risk control, and partnership. These themes serve as guidance for the risk analyses to be performed periodically and provide the structure for supervision and risk reporting.
Legal Affairs
Legal Affairs (LA) prepares policy and supports operational activities for risk management. The main responsibilities of the department in this area are:
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Identifying and advising on present and future legislation and regulations;•
Advising on products and product documentation;•
Handling impending and current legal disputes;•
Advising on cooperation agreements.Insurance Treasury & Investment Management
The duties and responsibilities of Insurance Treasury & Investment Management (IT&IM) are primarily aimed at investments for own account and risk of SNS REAAL’s Insurance activities. In the risk governance structure, IT&IM has become the central point of contact of the operationally responsible investment managers. On 1 January 2011, the director of IT&IM became a member of ALCO Insurer and ALCO Group as advisor on the investment policy and its implementation.
The main responsibilities of IT&IM are:
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Advising and supporting the ALCO Group and the management boards of the insurance activities in their investment policy preparations;•
Providing operational support in the implementation of the investment policy;•
Drawing up and monitoring investment mandates approved by the ALCO Group, given the ALM and investment policies;•
Monitoring if the actions of investment managers are within the mandates given, and assessing their performance;•
Monitoring security lending and repo activities in the insurance portfolios, the execution of which has been outsourced to professional and specialised parties.Group Audit
Group Audit (GA) reports to the chairman of the Executive Board and also has a reporting line to the Audit Committee of the Supervisory Board. In this way, the department is able to perform its activities independently of the business units and the departments of SNS REAAL.
Group Audit carries out its audits on behalf of the Executive Board based on a dynamic risk analysis. This risk analysis was discussed with the external auditor and the Dutch Central Bank in accordance with the Insurers’ Code. The audits focus on the internal risk management and control system, related processing procedures and (reliability of)
management information.
Group Audit is also responsible for carrying out the differentiated internal audit activities on behalf of the Business Unit management boards and line management. These audits focus on the (permanent) effect of the control measures included in procedures. In addition, various types of audits are performed at the request of the management boards, including certification activities for external parties.