Context Visualised home Talk to us

LibraryRisk Management FrameworkSet appetite where the risk sits

Our risk management framework · Appetite

Set appetite where the risk sits

Appetite starts as a few statements for the whole firm. As the firm matures, it adds a layer for each class, subclass and risk, each tied to capital and tracked by an indicator.

Appetite in layers

Start with the firm. Add detail as the business matures.

  • Start. Four or five statements the board signs for the whole firm.
  • Add. One layer at a time: class, then subclass, then single risk.
  • Connect. Each layer sits under the one above, so a breach shows which statement it touches.
  1. FirmFour or five plain statements the board signs
  2. ClassA limit for each class of risk, such as insurance or operational risk
  3. SubclassA limit on each capital model line, such as reserve risk
  4. RiskA limit on a single risk the board wants watched closely

Select a statement to see where it applies and how it is tracked.

  • Pinned to. The pills show the parts of the business the statement covers.
  • Tracked by. Indicators show where the business stands today, against a threshold the board agreed.
  • Agreed Management Actions. Each action is agreed with the board in advance, with a trigger and an owner. When the trigger is met, it appears in the actions register with that owner, so nobody has to remember it.

Hover over or tap an ID to see its title.

Capital

Pinned to
  • Syndicate 9146
  • Syndicate 9147

We hold enough capital to keep solvency coverage above 135%. Even after a 1-in-10 year loss, coverage stays above 115%.

Tracked by

  • Solvency coverage ratio
  • Coverage after a 1-in-10 year loss
  • Casualty actual against expected claims

Agreed Management Actions

  • Pause new US casualty growthTrigger: Coverage after a 1-in-10 year loss falls below 130%Active. Trigger met. Now in the actions register.
  • Buy extra catastrophe reinsuranceTrigger: Solvency coverage falls below 145%On the rack. Agreed in advance. Waiting for its trigger.
  • Commission an independent reserve reviewTrigger: Reserve risk capital rises above £80m, against £73m todayOn the rack. Agreed in advance. Waiting for its trigger.
Releasing soon

The board report

We are finishing the risk appetite report for Halden, our fictitious Lloyd's managing agent. It will show the board each statement against its indicators, with the actions under way.

Follow Halden to hear when it is out.

Struggling to take a data-led approach to monitoring risk appetite? Get in touch.

Talk to us