QBE Syndicate 2999 Annual Report and Accounts 2009

Risk management
The syndicate’s activities expose the business to a number of key risks which have the potential to affect the syndicate’s ability to achieve its business
objectives. The board, supported by the risk and capital committee, is responsible for ensuring that an appropriate structure for managing these risks
is maintained. The board’s appetite reflects the fact that it is not realistic or desirable to eliminate risk entirely, and therefore seeks to ensure that the
appropriate controls are in place to effectively manage risks in line with the agreed tolerance.
The syndicate continues to develop its risk management capability to ensure that an effective framework exists to support the management of all types
of risk both currently and in the future under the Solvency II regime. Elements of this framework include the regular identification and assessment of the
key risks and controls as well as clearly defined ownership of both the risks and controls.
Risk groups
The key risks can be grouped under the following headings:
Insurance risk
Credit risk
Capital and liquidity risk
Market risk
Operational risk
The syndicate’s business is to accept insurance risk, which is appropriate to enable it to meet its
objectives. In line with the QBE Group risk strategy, the syndicate seeks to balance insurance risk
with reward. All underwriting divisions are set specific and measurable performance targets, which
they are expected to achieve by operating within the parameters of the approved business plan.
In addition to the insurance terms of trade offered as standard, a certain amount of credit risk is
unavoidable, as it can arise as a result of the inability or slow payment of any of the syndicate’s
counterparties. The syndicate therefore seeks to limit exposure as far as is practical and has
established detailed guidelines, procedures, limits and monitoring requirements to mitigate credit risk.
The objective of the syndicate’s capital and liquidity risk management is to ensure that; capital is
optimally managed; that the syndicate remains solvent by a significant margin and all withdrawals
and funding requirements can be met out of readily available sources of funding. The syndicate
seeks to maintain a strong liquidity position by holding its assets predominantly in liquid funds.
Exposure to market risk is managed through the investment strategy, which reflects the appetite of
the board. The strategy is deliberately conservative in order to eliminate potential volatility to market
fluctuations as much as possible.
The syndicate seeks to mitigate exposure to operational risks through ensuring that an effective
infrastructure, robust systems and controls and appropriately experienced and qualified individuals
are in place throughout the organisation.
Group risk The syndicate seeks to align objectives to QBE Group strategy as well as to relevant Group policies,
guidelines and reporting requirements. The CEO monitors and manages Group risks with the other
Divisional CEOs within the Group through the Group Operations Executive.
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QBE Syndicate 2999
Annual report 2009