Transcript Canadian Institute of Actuaries L’Institut canadien des

Canadian
Institute
of
Actuaries
L’Institut
canadien
des
actuaires
2007 Annual Meeting ● Assemblée annuelle 2007
Vancouver
2007 Annual Meeting
Assemblée annuelle 2007
Enterprise Risk Management 101
Company Perspective
Altaf Rahim
AEGON Canada
2007 Annual Meeting
Assemblée annuelle 2007
Agenda
•
Brief Overview of AEGON Canada
•
Purpose of ERM
•
Implementation of ERM
•
Final Thoughts
AEGON Canada
•
AEGON Canada consists of:
2007 Annual Meeting
Assemblée annuelle 2007
–
Transamerica Life Canada
•
–
AEGON Capital Management
•
–
Canada’s largest franchised financial planning company
AEGON Dealer Services
•
•
Offers mutual funds
Money Concepts Limited
•
–
Offers active asset management to Canada’s top pension
funds, foundations and institutional investors
AEGON Fund Management
•
–
Offers life insurance and savings products
Mutual fund dealership
Member of the AEGON Group, one of the worlds
largest insurance and pension companies
2007 Annual Meeting
Assemblée annuelle 2007
Risk Management
•
AEGON has a decentralized approach
•
Group Risk is responsible for risk
management oversight at the Group
level
•
AEGON Canada works closely with
Group Risk and AEGON USA
Corporate Risk
ERM Purpose
2007 Annual Meeting
Assemblée annuelle 2007
•
Described in the Company’s Board approved
Enterprise Risk Management Policy
•
ERM is the ongoing process of developing,
implementing and monitoring financial and
operational risk strategies
•
ERM provides the framework in which all risk
management activities within AEGON Canada are
coordinated.
Implementation of ERM
2007 Annual Meeting
Assemblée annuelle 2007
•
•
•
•
•
Risk Management Mandate
ERM Framework Objectives
ERM Framework
Policies
Risk Reporting
2007 Annual Meeting
Assemblée annuelle 2007
Risk Management Mandate
•
Risk Management contributes to the achievement
of AEGON Canada’s risk management and
governance objectives
•
Risk Management function acts independently to
identify and assess financial and operational risks
facing the Company
•
Reports on risk management matters to Company
Management and the Audit Committee of the Board
•
Chief Risk Officer has periodic “in camera” sessions
with the CEO and the Audit Committee of the Board
2007 Annual Meeting
Assemblée annuelle 2007
ERM Framework Objectives
•
ERM framework provides a clear reporting structure
for all financial and operational risks
•
Allows the Risk and Capital Committee to review
risks based on the information provided through
other organizational committees and working
groups
•
Limits the inherent risk of working in silos
•
Allows for the early detection of potential issues
that may impact the Company
ERM Framework
2007 Annual Meeting
Assemblée annuelle 2007
Risk & Capital
Committee
(RCC)
Risk
Management
Asset Liability
Management
Capital
Management
Economic
Capital
Liquidity
Management
Shock Testing
Portfolio Mgmt
Team (PMT)
Interest Rate
Management
Capital
Forecast
Policy
Governance
Operational
Risk Mgmt
ORM
Compliance
Risk Mgmt
Legislative
Compliance
Mgmt System
(LCMS)
IT Risk
Management
Information Security
Support Council
AEGON NV
Risk Report
Credit Risk
AEGON
International
Security COI
Conflict of Interest
Questionnaire
Group Risk
Reporting
Portfolio
Concentration
US Divisional
Security Officer
Council
Complaints
Product
Development
Steering Committee
ALM
Key Initiative
Steering Committee
Crisis
Management
Money
Laundering
Report
Market
Conduct
2007 Annual Meeting
Assemblée annuelle 2007
Risk and Capital Committee
•
Comprised of Senior Management of the Company
•
Responsible for overseeing the planning, directing,
and controlling of the impact on the Company of
risks arising from its operations
•
Identification of material risks
•
Direct the implementation of financial and
operational risk strategies
2007 Annual Meeting
Assemblée annuelle 2007
Risk and Capital Committee
•
Development of risk measurement metrics
•
Establishment of policies and operating guidelines
for the management of risk
•
Monitoring and measurement of compliance to risk
management policies
•
Reporting of results of risk monitoring to the Board
Policies within ERM Framework
Enterprise Risk
Mgmt
Asset Liability
Management
2007 Annual Meeting
Assemblée annuelle 2007
Risk
Management
Capital
Management
Operational
Risk Mgmt
Compliance
Risk Mgmt
Anti Money
Laundering
Risk Mgmt Policy
Enterprise
Risk Mgmt Policy
Equity
Risk Mgmt policy
Liquidity
Risk Mgmt Policy
Product Design &
Pricing Mgmt
Risk Mgmt Policy
Foreign Exchange
Risk Mgmt Policy
Capital
Risk Mgmt Policy
Enterprise Information
Security Standards
Outsourcing
Risk Mgmt Policy
Underwriting & Claim
Risk Mgmt Policy
Interest Rate
Risk Mgmt Policy
Investment & Lending
Risk Mgmt Policy
Staff Security
Handbook
Privacy
Risk Mgmt policy
Signing Authorities
Risk Mgmt Policy
Asset Liability
Risk Mgmt Policy
Risk Management
Mandate
Asset Liability
Operating Guideline
Reinsurance
Risk Mgmt Policy
Credit name
Limit Policy
Equity Risk
Pricing Policy
Derivative Use
Policy
ORM
Crisis
Management
Annual
Business Continuity
Policy
IT Risk
Management
Employee
Code of Conduct
Conflict of Interest
Questionnaire
2007 Annual Meeting
Assemblée annuelle 2007
Risk Reporting
•
Stress tests help identify sensitivity to various risks
(e.g. equity, interest, mortality)
•
Credit name limit reporting measures the
Company’s economic exposure to credit risk
•
Liquidity risk reporting allows Management to
identify any liquidity issues over a specified time
horizon under various stress scenarios
•
Operational risk reporting reveals any potential
losses due to operational risk based events
•
Compliance to Board approved policies
2007 Annual Meeting
Assemblée annuelle 2007
Final Thoughts
•
Enterprise risk management has to be important for
Senior Management
•
Risk management needs to be embedded in the
culture of the company
•
Risk management should be viewed as a business
partner
•
Pro active identification of material risks
•
Need to develop strategies to mitigate risks based
on Company’s tolerance