The purpose of risk management is to manage the risks that could jeopardise the performance of the company’s statutory responsibilities, the achievement of its strategic goals and the development and performance of the business according to the goals set.
The aim of risk management is the identification, assessment, restriction and monitoring of Etera’s business risks as well as the limitation of damage caused by actualised risks. Risk management furthers the achievement of Etera’s goals and supports its business. Risk management has been integrated as far as possible into Etera’s normal activities and management.
The overall responsibility lies with the Board of Directors and the Managing Director
Risk management is part of internal control. The overall responsibility for risk management lies with the Board of Directors and the Managing Director. The Board of Directors annually approves a risk management plan that covers all operations. The Managing Director supervises and steers risk management. The responsibilities for the coordination of the planning, assessment and reporting of Etera’s entire risk management to the extent approved of by the Managing Director have been assigned separately.
Risk monitoring related to investments has been organised separately from the Investment function. The task of the Finance and Human Resources function’s controller team is to assess and monitor investment risks and report them to the Board of Directors and management.
Etera’s Legal Compliance function provides internal support and guidelines concerning the application of the regulations and provisions applicable to the company. An internal inspector assesses the functionality and sufficiency of internal control and risk management and inspects reporting, compliance with guidelines and the achievement of goals, among other things. Auditors carry out statutory audits, examine the company’s operations and processes, and inspect its governance.
Investment activities involve the greatest financial risks
Investment risks are managed by altering the amount and allocation of risk in the investment portfolio so that the amount and content of the risks are always correctly proportioned in terms of the company’s solvency and optimal in terms of the situation in the financial markets. Etera’s Board of Directors has, in its investment plan, defined risk limits, i.e. how much risk can be taken in the different forms and in terms of the entire portfolio. Equity, interest rate, credit and currency risks make up the key risk areas, in addition to real estate and hedge fund risks.
Insurance business risks are monitored regularly
Insurance business risks are monitored regularly throughout the year through assessments of the development of the insurance business result. Insurance business risks are managed using the equalisation provision, which serves as a buffer for the insurance business. The underwriting profit is transferred to the equalisation provision and, correspondingly, the underwriting loss is covered by it.