A principal responsibility of the Committee is to advise the Board on risk appetite in relation to the core risks that the Group may be exposed to, being:

(a) insurance risks;
(b) investment and market, liquidity and counterparty credit risks;
(c) regulatory and legal change;
(d) material business and operational risks; and
(e) reputational risks.

The Committee also considers risks that may emerge as a result of changes in the economic and financial environments in which the Group’s businesses operate.

The Committee advises the Board on the appropriateness of the Group’s overall risk management framework and whether the framework is sufficient to provide assurance that the key risks to the Group are being appropriately assessed. As well as being informed through regular structured reviews, the Committee is able to request specific reports and reviews on aspects of the framework from the Group Chief Risk Officer. The inaugural meeting of the Committee received a detailed presentation on the components and overall operation of the framework. The Committee will also receive an annual report from the Group Regulatory Risk and Compliance Director on regulatory compliance matters and the Company’s relationship with its regulator, the Financial Services Authority.

The Committee discharges its responsibilities through the receipt of reports from the Group Chief Risk Officer and a rolling programme of reviews considering the business and macro risks for specific aspects of the Group’s activities. Reports cover both changes to the profile of risks arising from the pursuit of the Group’s strategy, as well as changes in external markets, regulation and legislation. During 2010, focused reviews by the Committee included the risks associated with the Group’s annuities business, the fiscal environment in which the Group operates and the implications of sovereign debt events. The Committee also considered the Group’s programme of stress and scenario tests and the implications of the results to the Group.

The Committee’s work is closely linked to that of the Audit Committee, and the membership of the Chairman of the Audit Committee in addition to the regular attendance of the Group Chief Internal Auditor and a representative of the external auditors promotes a consistent and coherent approach to the oversight of risk on behalf of the Board.

The Risk Management section of this Annual Report and Accounts was reviewed and recommended to the Board by the Committee.