Risk management
Talanx AG monitors and closely manages the risk position within the Group and the individual companies. It pursues the goal of avoiding developments that pose a threat to the Group as a going concern while taking advantage of potential opportunities.
The primary goal is to ensure compliance with the risk position using risk budgets. The criteria for this are as follows:
- We generate positive annual earnings in accordance with IFRS with a probability of 90%.
- The economic capital base must correspond to at least an aggregated 3,000-year shock (1 year probability of ruin).
- The investment risks in the Group should be limited to less than 50% of the aggregated requirement for risk-based capital.
The information derived from our risk management system provides an overview of the current and projected future aggregated risk situation of our Group at any time. Therefore, the risk management system forms an integral element in the decision-making process at all management levels by permitting a comprehensive and systematic assessment of the opportunities presented and the associated risks.
Risk Management at Talanx uses appropriate simulation models and processes based on acknowledged and advanced methods for risk identification, risk quantification, and risk controlling, and for determining the required risk-based capital.
The risk strategy, centrally defined guidelines, methods and procedures, as well as limits and threshold values provide us with a framework for local monitoring and ad-hoc reporting. Moreover, central risk management quantifies and aggregates all risk positions at Group level. It generates central reporting and monitors the measures across the Group for controlling risks which threaten the going concern of the Group and compliance with limits and risk budgets.
Our investment policy focuses on stable and sustainable results, liquidity requirements and the underwriting commitments to our customers so that we achieve a well diversified portfolio and an optimum risk and return ratio.
– We always adopt a forward-looking and comprehensive approach to controlling risks –
> Growth target
