Risk management
Overall system of risk management
The overriding goal of Hannover Re's risk management is to adhere to its strategically defined risk positions and to ensure that sufficient capital resources are available at all times. We attach central importance to the following elements of our risk management system:
- Systematic management and monitoring of all conceivable risks
- Separation between units that enter into or manage risks and those that monitor risks
- Process-independent monitoring by Internal Auditing
- Feedback-control-based review of the efficiency of the systems and adjustment as necessary
- Standard and ad hoc reporting to the Risk Committee and the Executive Board
- Documentation of the vital elements of the system in mandatory instructions
- Good financial strength and risk management ratings
The US rating agency Standard & Poor's assessed our risk management as "Strong", the
second-highest rating. This evaluation testifies to the quality of Hannover Re's holistic approach to risk management, also in comparison with the broader market environment.
Internal risk model
We have developed an internal risk model in order to quantify the risks to which Hannover Re is exposed. It encompasses statistical models both for individual risks (e.g. capital market risks such as interest rate changes or underwriting risks such as exposure to natural disasters) and for the aggregation of such individual risks. The internal model is oriented towards standard market practice and is subject to constant refinement.
The model comprises the following risks:
- Global risks
- Strategic risks
- Technical risks (non-life, life and health reinsurance)
- Investment risks (market and credit risks)
- Operational risks
- Emerging risks
For more detailed information, please refer to the relevant chapters of the annual group report.
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