Risk Management StrategyRisk Management Strategy

Risk Management Strategy

14. The RMS is a high level document which documents:

(a) the life company’s strategy for managing risk;

(b) the extent and circumstances under which the life company is prepared to accept risk; and

(c) the key elements of the risk management framework which give effect to the strategy for managing risk.

15. A life company’s RMS must, at a minimum:

(a) detail the life company’s approach to the matters listed in paragraph 14;

(b) identify the policies and procedures dealing with the following risk management matters, including the date when each policy or procedure was last revised, the date that it is next due for revision and the position responsible for its maintenance:

(i) the processes for identifying and assessing material risks;

(ii) the process for establishing and implementing mitigation and control mechanisms for material risks;

(iii) the process for the monitoring and reporting of risk issues (including communication and escalation mechanisms);

(iv) the mechanisms in place for monitoring and ensuring continual compliance with all prudential requirements;

(v) the life company’s approach to management of capital;[6] and

(vi) the life company’s approach to business continuity management (refer to Prudential Standard CPS 222 Business Continuity Management) and outsourcing (refer to Prudential Standard CPS 231 Outsourcing);

(c) describe the relationships within the risk management framework between the Board, Board committees and senior management;

(d) identify those positions with managerial responsibility for the risk management framework, and set out their roles and responsibilities;

(e) describe the approach to ensuring relevant staff have an awareness of the risk management framework and instilling an appropriate risk culture across the life company; and

(f) describe the process by which the risk management framework (including the RMS) is reviewed and the intended coverage and timing for these reviews.

16. The RMS must describe the life company’s entire approach to risk management. To this end, if the life company is a subsidiary within a corporate group, or an Eligible Foreign Life Insurance Company (EFLIC), where any element of the life company’s risk management framework is controlled by, influenced by, or subject to approval by another entity in the group, or by its head office, the RMS must also summarise:

(a) the group (or head office) policy objectives and strategies;

(b) whether the life company’s RMS is derived wholly or partially from the group (or head office) risk management arrangements;