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Allianz Annual Report 2013

Annual Report 2013    Allianz Group124 Risk capital controls Similar to our ICOFR framework, we have also established a robust and comprehensive control concept in the risk capital calculation and aggregation process, since our internal risk capital calculations incorporate economic factors that are not fully reflected in the accounting results. We have put in place additional controls within our management reporting processes to ensure that these additional estimates are adequately controlled. These controls include the validation of models and assump- tionsbyindependentreviewsandcontinuousbenchmarkingtomarket and/or peer assumptions and practices. We benchmark and explain our non-market assumptions against practices in the industry, actuarial associations and guidance from supervisory authorities. During 2013, we worked on further improving the internal con- trol environment around the computation of our internal risk capital in anticipation of the future Solvency II regime. We will continue to make refinements as the Solvency II requirements evolve. −− Preventive and detective key controls over the financial reporting process are put in place to reduce the likelihood and the impact of financial misstatements. If a potential risk materializes, actions are taken to reduce the impact of the financial misstate- ment. Given the strong dependence of financial reporting pro- cesses upon information technology systems, we also include IT controls. −− Finally, we focus on ensuring that controls are appropriately designed and effectively executed. We have set consistent docu- mentation requirements across the ­Allianz Group for elements such as processes, related key controls and their execution. We conduct an annual assessment of our control system to maintain and continuously enhance its effectiveness. Group Audit and local internal audit functions ensure that the overall quality of our control system is subjected to regular control-testing, to assure reasonable design and operating effectiveness. Internal Audit does so through a comprehensive risk-based approach, which holistically assesses the key controls of the company’s internal procedures and processes, including local and Group internal controls over financial reporting. Governance Responsibility for ensuring the completeness, accuracy and reliability of our consolidated financial statements rests with the Chairman of the Board of Management and the board member responsible for Finance,ControllingandRiskof­AllianzSE,supportedbyGroupCenter functions, the Group Disclosure Committee and operating entities. The Group Disclosure Committee ensures that these board members are made aware of all material information that could affect our disclosures and assesses the completeness and accuracy of the information provided in the quarterly and annual financial reports. The committee meets on a quarterly basis before the financial reports are issued. Subsidiaries within the scope of our control system are individu- ally responsible for adhering to the Group’s internal control policy and for creating local Disclosure Committees that are similar to the Group-level committee. The entities’ CEOs and CFOs provide periodic sign-offs to the management of ­Allianz SE, certifying the effectiveness of their local system of internal controls as well as the completeness, accuracy and reliability of financial data reported to the Holding. Further control mechanisms In our opinion, a strong internal control environment is key to man- age our company successfully and to reinforce trust with our stake- holders. In addition to ICOFR, for example, we have implemented an enhanced internal control environment across our largest Life insur- ance operating entities for the Market Consistent Embedded Value (MCEV) reporting process.

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