ApplicationApplication

Application

2. This Prudential Standard applies to all life companies including friendly societies (together referred to as life companies) registered under the Act.[1]

   3. This Prudential Standard applies to life companies from 1 January 2013.

3. Nothing in this Prudential Standard prevents a life company from applying a risk management framework, Risk Management Strategy (RMS) or business plan that is also used in a related company, provided that the risk management framework, RMS or business plan has been approved by the life company for its purposes and meets the requirements of this Prudential Standard.

Interpretation

5. Terms that are defined in Prudential Standard LPS 001 Definitions appear in bold the first time they are used in this Prudential Standard.

The role of the Board

6. The Board of directors (the Board) is ultimately responsible for the risk management framework of the life company.[2] The Board must ensure that a life company has, at all times, a risk management framework to prudently manage the risks arising in the life company and the risks to the policy owners of the statutory funds.

7. The Board is responsible for the risk management framework whether or not risk management and business operations are outsourced or are part of a corporate group.[3]

8. The Board must approve a written RMS for the life company and must be satisfied that the RMS complies with this Prudential Standard.

9. The Board must be notified of any material deviation from the life company’s RMS.