Risk management

Risk management is integrated into all stages of business management and is composed of the following key elements:

risk strategy,

risk management processes within the first and second line of defence, and

ORSA process.

The Group’s risk management system is presented in the diagram below.

Risk strategy

Risk management processes

First line of defence

Pricing

Underwriting process

Underwriting limits

Investment policy and limits

Information and management reports

Second line of defence

Risk management function

Risk management committee

Risk reports

Risk register

Register of incidents

ORSA process

Second line of defence

Analysis of risk profile

Own assessment of solvency needs

Continuous compliance

Projections

Stress tests and scenario analysis

Third line of defence

Internal audit

The Sava Insurance Group and Group members are exposed to the following risks:

Underwriting risks arising from (re)insurance contracts. These are associated with the risks covered under (re)insurance contracts and with directly related activities.

Market risk related to volatile prices of financial instruments, market prices of other assets and participations in other companies.

Credit risk arising from non-performance and changes in the credit rating of securities issuers related to the investment portfolio of (re)insurers, and of reinsurers, intermediaries and other business partners who have outstanding liabilities to the (re)insurers.

Operational risk associated with inadequate or inefficient internal processes, people and computer systems, or from external events.

Liquidity risks related to loss resulting from insufficient liquid assets when liabilities become due or increased costs of realisation of less liquid assets.

Strategic risk associated with achieving the Company’s strategic plans, and reputational risk, including any implications.

Individual risks are described in detail in the notes to the financial statements of the Sava Insurance Group (section 18.6).