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Internal environment

Enterprise Risk Management

 

Company name: Zurich Financial Services Group

Student name: Lubov Luchkiv

Group: 5402

 

 

Moscow 2011

Table of content

Introduction. 3

Internal environment. 3

Objectives setting. 5

Event identification. 6

Risk assessment. 7

Risk Response. 8

Control activities. 9

Information and communication. 10

Monitoring. 10

Conclusion. 11

 

 


Introduction

Zurich Financial Services Group (Zurich, or the Group) is one of the world’s largest insurance groups, and one of the few to operate on a truly global basis. Its mission is to help customers understand and protect themselves from risk.

Zurich offers a wide range of general and life insurance products and services for individuals, small businesses, mid-sized and large companies and multinational corporations. It has strong positions in North America and Europe, and growing positions in Asia-Pacific, the Middle East and Latin America.

The mission of risk management at Zurich is to promptly identify, measure, manage, report and monitor risks that affect the achievement of strategic, operational and financial objectives. This includes adjusting the risk profile in line with the Group’s stated risk tolerance to respond to new threats and opportunities in order to optimize returns.

This paper represents the overview of risk management conducted by Zurich Group.

Internal environment

Zurich is committed to effective governance for the benefit of its shareholders, customers, employees and other stakeholders based on the principles of fairness, transparency and accountability. Structures, rules and processes are designed to provide for proper organization and conduct of the business within the Group and to define the powers and responsibilities of its corporate bodies and employees.

Zurich Financial Services Ltd has an effective structure for cooperation between the Board of Directors, Management and internal control functions. This structure establishes checks and balances and is designed to provide for institutional independence of the Board of Directors from the Group Chief Executive Officer (CEO) and the Group Executive Committee (GEC). The CEO and GEC are responsible for managing the Group on a day-to-day basis.

The Board of Directors currently consists of eleven members and is chaired by Manfred Gentz. It is responsible for determining the overall strategy of the Group and for the supervision of management. Board meetings are held at least six times per year.

The members of the Board of Directors are elected by the shareholders at the annual general meeting. After the election, the Board constitutes itself in its first meeting and appoints the chairman and the vice-chairman amongst its members. The ordinary term of office of the board members is three years. All members are non-executive directors, independent of management.

Zurich’s core values are:

· Integrity.

· Customer centricity.



· Excellence.

· Teamwork.

· Sustainable value creation.

Graph 1. Risk Management Framework

The Group’s major risk management objectives are to:

• Protect the capital base by monitoring that risks are not taken beyond the Group’s risk tolerance

• Enhance value creation and contribute to an optimal risk-return profile by providing the basis for an efficient capital deployment

• Support the Group’s decision-making processes by providing consistent, reliable and timely risk information

• Protect Zurich’s reputation and brand by promoting a sound culture of risk awareness and disciplined and informed risk taking

 

At the heart of the risk management framework is a governance process with clear responsibilities for taking, managing, monitoring and reporting risks. The Group articulates the roles and responsibilities for risk management throughout the organization, from the Board of Directors and the Chief Executive Officer to its businesses and functional areas, thus embedding risk management in the business.

One of the key elements of the Group’s risk management framework is to foster risk transparency by establishing risk reporting standards throughout the Group.

Various governance and control functions coordinate to help ensure that objectives are being achieved, risks are identified and appropriately managed and internal controls are in place and operating effectively. This coordination is referred to as “integrated assurance.”

Risk management is not only embedded in Zurich’s business but is also aligned with the Group’s strategic and operational planning process. The Group assesses risks systematically and from a strategic perspective through its proprietary Total Risk Profiling™ (TRP) process, which allows Zurich to identify and then evaluate the probability of a risk scenario occurring, as well as the severity of the consequences should it occur. The Group then develops, implements and monitors appropriate improvement actions. The TRP process is integral to how Zurich deals with change, and is particularly suited for evaluating strategic risks as well as risks to its reputation. At Group level this process is performed annually, reviewed regularly and closely tied to the planning process. In addition to this qualitative approach the Group regularly measures and quantifies material risks to which it is exposed. Zurich’s risk-based capital model provides a key input into the Group’s strategic planning process as it allows an assessment as to whether the Group’s risk profile is in line with the Group’s risk tolerance. In particular, the Group’s risk-based capital model forms the basis for optimizing the Group’s risk-return profile by providing consistent risk measurement across the Group.

Graph 2. Risk governance and risk management organization

 

The Board of Directors of Zurich Financial Services Ltd has ultimate oversight responsibility for the Group’s risk management. It establishes the guidelines for the Group’s risk management framework and key principles, particularly as articulated in the Zurich Risk Policy, and decides on changes to such guidelines and key principles, as well as transactions reaching specified thresholds.

The Chief Executive Officer (CEO), together with the Group Executive Committee (GEC), oversees the Group’s performance with regard to risk management and control, strategic, financial and business policy issues of Group-wide relevance. This includes monitoring adherence to and further development of the Group’s risk management policies and procedures.

The Chief Risk Officer leads the Group Risk Management function, which develops methods and processes for identifying, measuring, managing, reporting and monitoring risks throughout the Group. Group Risk Management proposes changes to the risk management framework and the Group’s risk policies; it makes recommendations on the Group’s risk tolerance and assesses the risk profile. The Chief Risk Officer is responsible for the oversight of risks across the Group; he regularly reports risk matters to the Chief Executive Officer, senior management committees and the Risk Committee of the Board.

The Group Risk Management organization consists of central functions at Corporate Center and a decentralized risk management network at segment, regional, business unit and functional levels.


Date: 2015-02-16; view: 730


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