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Risk and Capital Management

 

There has been significant investment in risk and capital management at Old Mutual during 2010 and 2011. This has been sponsored from the top of the organisation, at both Executive and Board level, and driven through the new group operating model and a group-wide project iCRaFT (integrated capital risk and finance transformation). The Group's Board Risk Committee which was established in 2010 has overseen these developments in risk management including setting the risk appetite limits and monitoring the group's risk profile.

At the start of 2012 , we are at a stage where the new operating model and risk management at Old Mutual is embedded in our businesses, and iCRaFT is becoming part of business as usual. Risk frameworks, governance and the group's internal capital model are designed and overseen centrally but implemented by our global businesses locally. This is reinforced through senior Group Executive representation in the local business unit Boards coupled with a formalised dual reporting for all key control functions.

In 2010 we set out the group's risk strategy and stated risk preferences. This has guided the business strategy and planning processes for the business units and the group. We have clear risk appetite limits representing economic capital, cash flow and earnings at risk as well as operational risk and the business performance is monitored against these limits. This is used by the Remuneration Committee as a factor in determining incentive payments. .

We are well placed for the forthcoming regulatory changes under Solvency II and the South African equivalent SAM. We have an internal capital model which delivered the first results in June 2011, our risk, capital and liquidity policies and processes have been enhanced and we have much greater line of sight on the key risks in the businesses and how these interact. In particular there is now centralised sign off of all new products which contain guarantees using risk based capital metrics, and prior approval for any significant changes to the business unit risk profile. The risks in the Bermuda business in run-off, remain significant but these are well known and very actively managed and monitored.

Sue Kean
Group Chief Risk Officer

For more information abour risk management at Old Mutual, please view our Annual Report and Accounts 2011.