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Allianz Annual Report 2013

C Group Management Report Risk and Opportunity Report and Financial Control 105 Risk and Opportunity Report 123 Controls over Financial Reporting and Risk Capital Annual Report 2013    Allianz Group 119 Risk governance Risk Management Framework As a provider of financial services, we consider risk management to be one of our core competencies. It is therefore an integral part of our business process. Our risk management framework covers, on a risk based approach, all operations including IT, processes, products and departments/subsidiaries within the Group. The key elements of our risk management framework are: −− Promotion of a strong risk management culture supported by a robust risk governance structure. −− Consistent application of an integrated risk capital framework acrosstheGrouptoprotectourcapitalbaseandsupporteffective capital management. −− Integration of risk considerations and capital needs into man- agement and decision-making processes through the attribution of risk and allocation of capital to the various segments. This comprehensive framework ensures that risks are identified, ana- lyzed, assessed and managed in a consistent manner across the Group. Our risk appetite is defined by a clear risk strategy and limit structure. Close risk monitoring and reporting allows us to detect potential deviations from our risk tolerance at an early stage at both the Group and operating entity levels. For the benefit of shareholders and policyholders alike, our risk management framework adds value to ­Allianz SE and its operating entities through the following four primary components: Risk underwriting and identification:  A sound risk underwriting and identification framework forms the foundation for adequate risk taking and management decisions such as individual trans­action approvals, new product approvals and strategic or tactical asset allo- cations. The framework includes risk assessments, risk standards, valuation methods and clear minimum standards for underwriting. Risk reporting and monitoring:  Our comprehensive qualitative and quantitative risk reporting and monitoring framework provides senior management with the transparency and risk indicators to help them decide our overall risk profile and whether it falls within delegated limits and authorities. For example, risk dashboards, inter- nal risk capital allocation and limit consumption reports are regu- larly prepared, communicated and monitored. Risk strategy and risk appetite:  Our risk strategy clearly defines our risk appetite. It ensures that rewards are appropriate for the risks taken and that the delegated authorities are in line with our overall risk-bearing capacity. The risk-return profile is improved through the integration of risk considerations and capital needs into decision- making processes. This also keeps risk strategy and business objec- tives consistent with each other and allows us to take opportunities within our risk tolerance. Communication and transparency:  Finally, transparent and robust risk disclosure provides the basis for communicating this strategy to our internal and external stakeholders, ensuring a sus- tainable positive impact on valuation and financing. It also strength- ens the risk awareness and risk culture throughout the entire Group. Risk Governance Structure As a key element of our risk management framework, ­Allianz’s approach to risk governance enables integrated management of our local and global risks and ensures that our risk profile remains con- sistent with our risk strategy and our capacity to bear risks. Supervisory Board and Board of Management Within our risk governance system the Supervisory Board and Board of Management of ­Allianz SE have both ­Allianz SE and Group-wide responsibilities and have set up committees to provide them with support. Examples include: Supervisory Board The Risk Committee supervises the effectiveness of the Allianz risk management and monitoring framework. Furthermore, it focuses on risk-related developments as well as general risks and specific risk exposures. Board of Management The Board of Management formulates business objectives and a cor- responding, consistent risk strategy. The core elements of the risk framework are set out in the ­Allianz Group Risk Policy, which is approved by the Board of Management. −− The Group Capital Committee supports the Board of Manage- ment with recommendations regarding risk strategy, capital and limit allocation. −− The Group Risk Committee defines risk standards and forms the major limit-setting authority within the framework set by the Board of Management. −− The Group Finance Committee is authorized by the Board of Management to oversee investment and financing activities, including the approval of significant transactions of ­Allianz SE and ­Allianz Group companies.

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