ICP 8 Risk Management and Internal Controls
The supervisor requires an insurer to have, as part of its overall corporate governance framework, effective systems of risk management and internal controls, including effective functions for risk management, compliance, actuarial matters and internal audit.
Systems for risk management and internal controls
8.1 |
The supervisor requires the insurer to establish, and operate within, an effective and documented risk management system, which includes, at least:
- a risk management strategy that defines the insurer’s risk appetite;
- a risk management policy outlining how all material risks are managed within the risk appetite; and
- the ability to respond to changes in the insurer’s risk profile in a timely manner.
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8.2 |
The supervisor requires the insurer to establish, and operate within, an effective and documented system of internal controls.
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Control functions (general)
8.3 |
The supervisor requires the insurer to have effective control functions with the necessary authority, independence and resources.
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Risk management function
8.4 |
The supervisor requires the insurer to have an effective risk management function capable of assisting the insurer to:
- identify, assess, monitor, mitigate and report on its key risks in a timely way; and
- promote and sustain a sound risk culture.
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Compliance function
8.5 |
The supervisor requires the insurer to have an effective compliance function capable of assisting the insurer to i) meet its legal, regulatory and supervisory obligations and ii) promote and sustain a compliance culture, including through the monitoring of related internal policies.
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Actuarial function
8.6 |
The supervisor requires the insurer to have an effective actuarial function capable of evaluating and providing advice regarding, at least, technical provisions, premium and pricing activities, capital adequacy, reinsurance and compliance with related statutory and regulatory requirements.
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Internal audit function
8.7 |
The supervisor requires the insurer to have an effective internal audit function capable of providing the Board with independent assurance in respect of the quality and effectiveness of the insurer’s corporate governance framework.
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Outsourcing of material activities or functions
8.8 |
The supervisor requires the insurer to retain at least the same degree of oversight of, and accountability for, any outsourced material activity or function (such as a control function) as applies to non-outsourced activities or functions.
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