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Risk report

Risk management

Every entrepreneurial activity involves a risk. The trust placed in Gerling as an insurer depends on the durable persistence of its performance and efficiency. This necessitates conscientious management of risks, with due consideration to aspects of profitability as well as observance of the framework conditions set out by the law.

The Gerling Risk Charter reflects the Group’s attitude towards the per- ception and management of risks. It is the basis on which risk manage- ment is implemented throughout the Gerling Group and mirrors the control of group operations by means of Standard & Poor’s Capital Ade- quacy Model.

Risk management as a core management function

Identification, assessment and management of entrepreneurial risks are core management functions. They are performed with the assistance of risk controllers in a system reflecting the decentralized organization of the Group. The various Gerling companies around the globe appoint their own risk controllers and define risk thresholds by a uniform method.

Risks are assessed in terms of their loss potential (loss of corporate value), their probability of occurrence and the current standard of their han- dling. The period reviewed is defined, as a matter of principle, by five- year business plans. In some areas (e.g. Life insurance), long-term risks are also identified. The information on the risks faced by each Gerling company and the measures taken to manage them are recorded in a DP tool specially developed for the purpose. This tool also generates risk reports for the management, at the same time enabling summaries of those reports to be produced for the different levels, up to and including Gerling Group level. Risks are assessed twice a year, once in the form of a detailed assessment and once as an update for management report- ing. If necessary, these assessments can be supplemented by interim reports.

Where a risk is assessed as exceeding the so-called A threshold, correc- tive action is imperative (compulsory control). To comply with the Gerling Risk Charter, risks with a high probability of occurrence need to be considered in business planning. The ongoing process of risk controlling ensures that the management is aware of the current sta- tus of risks and can then take appropriate action at an early time.

56 Gerling-Konzern Globale Rückversicherungs-AG/Management Report

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