Risk management
Overall system of risk monitoring and management
The following seven factors are hallmarks of our risk management system:
- central coordination by Group Risk Management and local risk responsibility in the various areas
- documentation of the essential components of the system in compulsory rules
- systematic and thorough recording of all conceivable risks that could jeopardise the company's net income or survival from the current perspective
- standard and ad hoc reports appropriate to the various risks
- quarterly meetings of the Risk Committee
- use of efficient steering and controlling systems, e.g. DFA risk budgets
- feedback-control-based review of the efficiency of the systems and adjustment as necessary in line with the prevailing business environment and/or changed risk
situation.
In 2007 the US rating agency Standard & Poor's assessed our risk management as "Strong", the
second-highest rating. This opinion reflects the quality of our 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.
Global risks
Global risks are external risks that are beyond our direct sphere of influence. They derive, inter alia, from changes in legislation and court practice, political developments and social changes, liability issues and environmental changes. We counter these potential risks by measures of early detection:
- monitoring of claims trends as well as analyses of claims and catastrophe losses
- review and, as appropriate, adjustment of the underwriting policy
- close tracking of developments in relevant legal areas, regulatory requirements, changes in accounting standards and rating agency requirements
|
