Our business is to manage risks

In the diagram below, we summarise the content provided in the following pages, setting out how we seek to understand and manage our risks.

Understanding our risk landscape

The risks that are inherent in our businesses arising from:

1. The products we write
2. The investments we hold to meet our obligations
3. The environment in which we operate

Risk management framework

Our formal framework for monitoring our risk landscape and ensuring that we are only exposed to those residual risks for which we have an appetite.

Our framework seeks to reinforce the parameters of acceptable risk taking, allowing business managers to make decisions that are consistent with our risk appetite.

Risk appetite

Our quantitative and qualitative expressions for the types of risk to which we are prepared to be exposed.

Alongside the minimum capital requirements that we wish to maintain and the degree of volatility of earnings we wish to avoid, we set a range of tolerances and limits for our material risk exposures.


Risk-based capital model

Our approach to determining the amount of capital that we need to hold for the residual risks to which we are exposed.

Our risk-based capital model seeks to measure by business line and risk type, the capital we assess as being required to survive a worse case 1-in-200 year event, taking account of correlations between risks.

Principal risks and uncertainties

Finally, we summarise our assessment of the principal risks and uncertainties, along with the associated trends and outlooks, and the steps we take to mitigate these principal risks in the Principal risks and uncertainties section.