Objective and key requirements of this PObjective and key requirements of this Prudential Standard

Objective and key requirements of this Prudential Standard

This Prudential Standard sets out the requirements for a life company to maintain a risk management framework and strategy that is appropriate to the nature and scale of its operations.

The ultimate responsibility to maintain the risk management framework and strategy rests with the Board of directors of the life company or, in the case of an eligible foreign life insurance company, with the Compliance Committee.

A life company’s systems, processes, structures, policies and people involved in identifying, assessing, mitigating and monitoring risks are referred to in this Prudential Standard as the risk management framework.

The key requirements of this Prudential Standard include that a life company must:

• maintain a risk management framework which is aligned with the life company’s internal capital adequacy assessment process and includes:

(a) a documented Risk Management Strategy;

(b) sound risk management policies and procedures;

(c) clearly defined managerial responsibilities and controls; and

(d) a documented business plan;

• ensure that its risk management framework is subject to effective and comprehensive review; and
• submit a Risk Management Declaration to APRA on an annual basis.