Page 60 - Continental Reinsurance 2022 Annual Report

58 Risk Management Statement
Introduction
Despite continued economic challenges in 2022, Continental
Reinsurance remained profitable, with investment income
growth of about 43%, an increase in profits after tax of 25%,
and stable return on equity of about 13%.
The Group also maintained its AM Best financial strength
rating of B+, despite its challenging operating environment.
This performance is an indication of the strength and
adequacy of Continental Reinsurance's risk management
framework, capabilities, and strategy, which the Group's
board of directors, through the management team,
continuously seeks to enhance.
At Continental Reinsurance, we are continuously investing in
improving our risk management capabilities, adopting
international best practices, and ensuring compliance with
regulatory requirements to further improve our risk maturity
level.
We recognize that Enterprise Risk management (ERM) is at the
core of our operations and therefore prioritize the effective
management of risks across our business.
Our risk management approach aims to minimise undue
exposure and risk concentration, limit potential losses from
stress events, and ensure continued capital adequacy.
This Risk Management Statement provides an overview of our
risk management framework, our risk culture, and approach
to managing various types of risks, including regulatory and
compliance, insurance, financial, operational, strategic, and
emerging risks.
Risk Management Framework
At Continental Reinsurance, we recognize that the risk
landscape is dynamic and constantly evolving and therefore
strive to maintain a robust risk management framework that is
integrated into our business processes and decision-making.
The responsibility and accountability for risk management
resides at all levels within the Group, from the board down
through the company to each business manager and risk
expert.
The ERM function, overseen by the Chief Risk Officer ("CRO"),
plays a pivotal role in the Group's Enterprise Risk Management
framework by designing and implementing processes for the
identification, assessment, and reporting of risks, and by
promoting the benefits of risk management across the group.
The Internal Audit function then assists the Board in evaluating management is a collective responsibility and requires the
the effectiveness of the internal controls put in place by
management, through comprehensive audits and reviews of
processes and procedures.
Our risk management framework is designed to ensure a
systematic approach to risk identification, assessment, and
mitigation. It follows internationally recognized standards,
aligns with relevant regulatory requirements, supports the
identification of current and emerging risks across the Group,
is tailored to the specific needs of our operations, and adopts
proactive measures to mitigate and manage risks effectively.
Risk Identification:
We have implemented a comprehensive risk identification
process that involves continuously monitoring internal and
external factors that could impact our operations. This
includes analysing industry trends, reviewing economic
conditions, and assessing emerging risks.
Risk Assessment:
Once risks are identified, we conduct a thorough assessment
to understand their potential impact and likelihood. We utilize
quantitative and qualitative methods to evaluate risks,
considering both financial and non-financial factors. We also
prioritize risks based on their significance and potential
consequences.
Risk Mitigation:
To mitigate risks, we employ a range of strategies that are
tailored to the specific nature of each risk. These strategies
may include risk avoidance, risk transfer, risk reduction
through internal controls and procedures, risk diversification,
and risk retention within acceptable limits.
Internal Controls and Compliance:
We maintain a robust system of internal controls to ensure
compliance with laws, regulations, and industry standards.
These controls are regularly reviewed and updated to address
emerging risks. We also have a dedicated team responsible for
monitoring and enforcing adherence to our risk management
policies and procedures.
Risk Monitoring and Reporting:
We continuously monitor risks to ensure that our mitigation
strategies remain effective. This includes regular reporting to
senior management and the board of directors, providing
them with a comprehensive view of our risk profile. We also
encourage a culture of risk awareness and reporting
throughout the organization, enabling timely identification
and response to emerging risks.
Risk Culture
At Continental Reinsurance, we recognize that effective risk
engagement of all employees.