AND-E operates a risk management framework across its business units, led by the Head of Risk Management and the Risk function. The Head of Risk Management is a member of the Executive Directors Committee and has overall day to day accountability for risk management.
The purpose of AND-E's Risk function is to maximise the probability of achieving the Group's objectives. This is by identifying the current and emerging risks to which the Group is exposed and developing strategies for dealing with these exposures. AND-E's aim is to recognise and manage risk, and make conscious decisions about the risks being taken; it is not always to eliminate risk.
AND-E's risk appetite statement is clear about which risks we will take – and on what conditions – in the pursuit of profits, and which risks we will not take. The Risk and Actuarial department provides tools, information and training to enable business managers to take risk and capital into account when making business decisions, and assesses the level of financial resources that the Group needs to deal with the risks that it takes. By providing a structure for the analysis of materialised risk events, the Risk Management Framework also helps AND-E to learn from past mistakes.
The Risk department's key responsibilities include:
Facilitating the update of the risk appetite statement through periodic reviews by the Group Risk Committee and ad-hoc reviews when considering proposals to extend our underwriting activities into new business areas.
Risk identification and assessment
Maintaining branch-level registers of material risks, emerging risks and materialised risk events. Also producing a Risk Dashboard to keep the AND-E Board informed about changes in the risk environment, and adherence to the risk appetite.
Pricing oversight and monitoring
Providing information to AND-E's Risk Committee on the adequacy of premiums. Also, reviewing proposals for pricing arrangements of new products, and material changes to pricing arrangements of existing products.
This is ensuring that AND-E is fully prepared to comply with the requirements of the Solvency 2 regime that is being implemented across the European Union. Solvency 2 introduces new valuation bases for assets and liabilities, new capital requirements, and new regulatory reporting and governance obligations. AND-E's Solvency 2 program has been in place since 2009, and is led by the Risk function, we have developed an internal capital model to determine the Solvency Capital Requirement.