talanx group annual report 2011 en

102
The Talanx Group Strategy Enterprise
management
Talanx Group. Annual Report 2011
Research and
development
With respect to risk limitation, key indicators have been specified
for steering and monitoring the Group’s risks within our central system
of limits and thresholds. In this context, limits and thresholds
for quantitatively measurable risks are designed to operationalise
risk steering and monitoring. Material risks that are impossible or
difficult to quantify (such as operational risks) are primarily steered
and monitored using appropriate processes and practices.
In the area of risk monitoring we distinguish between process-integrated
independent monitoring and process-independent monitoring.
Process-integrated independent monitoring is primarily the
responsibility of the Risk Committee, the Chief Risk Officer and
the organisational units supporting the CRO. Process-independent
monitoring is carried out by Internal Auditing and the Supervisory
Board.
The purpose of our risk reporting is to provide systematic and
timely information about risks and their potential implications
and to ensure adequate in-house communication about all material
risks as a basis for decision-making. Regular reporting on both
current business developments and on risk management issues is
intended to ensure that the Board of Management of Talanx AG is
kept continuously informed of risks and can intervene as necessary
to take controlling action; the Supervisory Board is also regularly
advised of the risk situation. Material changes in the risk position
are to be reported to the Board of Management of Talanx AG on an
ad hoc basis.
The potential implications of risks are not only to be documented
but must also be incorporated into the annual planning of the
Group companies, thereby making it possible to allow for the risks
of future development and to take appropriate countermeasures in
a timely manner. The plans drawn up by all Group companies and
the Group as a whole are discussed and approved by the Board of
Management and Supervisory Board of Talanx AG. Talanx AG draws
up its own results planning on this basis. The purpose of this planning
process is to make allowance not only for future developments
but also for the interdependencies between the planning of each
subsidiary and that of Talanx AG. In the context of the performance
management cycle both operational and strategic considerations
are factored into the planning.
Our decision-making and monitoring processes serve not only to
satisfy the extensive requirements placed on reporting and information
systems by the Insurance Supervision Act (VAG); rather, they
also extend to the preparation and examination of the annual and
consolidated financial statements, the internal control system and
the use of planning and controlling tools.
Markets and
general conditions
Business
development
Assets and
financial position
In the year under review our risk management activities in the
area of primary insurance were assessed as “adequate with positive
trend” by Standard & Poor’s. Hannover Re’s risk management was
assessed as “strong” by S&P.
In 2009 and 2010, Talanx Asset Management and AmpegaGerling
Investment GmbH were certified to US standard SAS 70 (“Statement
on Auditing Standards No 70”). Certification attests to an adequately
configurated control system and effective implementation of the
controls. In 2011, the SAS 70 audit was replaced by an audit pursuant
to the international standard ISAE 3402.
Internal control and risk management system
in the context of financial reporting
The hallmark of risk management within the Talanx Group is its
decentralised organisational structure. Responsibilities are split
between local risk management at the level of the divisions and
central risk management at the Group level.
The salient features of the internal control system (ICS) and risk
management system implemented at Talanx AG with regard to the
Group financial reporting process can be described as follows:
There is a clear management and corporate structure. Key
functions that span multiple areas are managed centrally.
The functions of the main areas involved in the financial reporting
process – Finance and Accounting – and those of Controlling
are clearly separated. Areas of responsibility are unambiguously
assigned (separation of functions).
The financial systems used are protected against unauthorised
access by appropriate measures on the IT side. Where possible,
the systems concerned run on standard software.
An adequate system of guidelines (e.g. on recognition and measurement
of assets and liabilities, work procedures) has been set
up and is constantly updated.
The departments and units involved in the financial reporting
process have the appropriate quantitative and qualitative
resources at their disposal.
Controls have been implemented in the financial reporting
processes and workflows: bookkeeping data that is received or
forwarded is checked for completeness and correctness by the
responsible members of staff. The peer-review principle is consistently
applied. In addition, programmed plausibility checks
are run using database-supported software.