Division Review of risk management framework - Life Insurance (prudential standard) determination No. 9 of 2012 - Prudential Standard LPS 220 - Risk Management - Review of risk management framework

Review of risk management frameworkReview of risk management framework

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Review of risk management framework

The life company must ensure that its risk management framework is subject to effective and comprehensive review by operationally independent, appropriately trained and competent persons. The frequency and the scope of the review should be appropriate to the life company, having regard to such factors as the size, business mix and complexity of the life company’s operations and the extent of any change to its business profile or its risk appetite.
The review of the risk management framework must include:

(a) a review of the RMS, to ensure that:

(i) the strategy for the management of risk remains appropriate to the company’s business, its policyholder profile and its financial circumstances; and

(ii) the RMS accurately documents the life company’s risk management framework;

(b) a review of the policies and processes described in subparagraph 11(b); and

The Appointed Actuary must include an assessment of the suitability and adequacy of the risk management framework as part of the Financial Condition Report required under Prudential Standard LPS 320 Actuarial and Related Matters.
Life companies must implement satisfactory internal audit procedures and/or external audit arrangements to ensure compliance with, and the effectiveness of, the risk management framework.
Where there are institutional, operational or other developments that materially affect the life company’s risk profile, the life company must assess whether any amendments to, or a review of, its risk management framework (including the RMS) are necessary to take account of the change.
In the event that a life company:

(a) is aware of a material breach of, or material deviation from, the risk management framework; or

(b) discovers that the risk management framework did not adequately address a material risk

the life company should notify APRA as soon as practicable.