With its various Group segments the Talanx Group offers an extensive range of products encompassing not only insurance but also financial and other services. The acceptance of risks constitutes the core of our business, and a highly developed level of risk awareness is vital to our success if we are to consistently maximize our opportunities. Talanx AG and its subsidiaries consequently employ a diverse range of methods and tools for risk monitoring and controlling.

Our decision-making processes and monitoring mechanisms not only satisfy the comprehensive requirements placed on reporting and information systems by the Insurance Supervisory Act, they also extend to the compilation and examination of the annual and consolidated financial statements, the internal control system and the use of extremely powerful planning and controlling tools.

We use a value-based approach (Intrinsic Value Creation) to steer our business operations. One of the most important parameters within this process is the risk capital, i.e. the capital needed to conduct our business activities. By using risk capital as a control parameter we are able to optimize the allocation of capital within the Group.

In accordance with our approach of ensuring the greatest possible decentralization, our subsidiaries each maintain their own risk management systems; for they are themselves best able to assess their risks and take timely risk management measures. Group Controlling specifies guidelines for the organization of local risk management systems that ensure a consistent minimum standard Group-wide, and with the aid of an internal risk model it determines the risk situation of the Talanx Group as a whole on the basis of the local risks. We are able to make a precise assessment of the risks using this internal risk capital model, which is currently based on the so-called GDV (German Insurance Association) model and is used for the analysis and measurement of individual risks as well as of the Group’s overall risk position. The purpose of the risk quantification is to calculate the risk capital on the basis of a 99.5% Value at Risk. The time horizon considered under the model is one calendar year. Quarterly reporting on both current business developments and on risk management ensures that the Board of Management of Talanx AG is kept constantly updated on risks and can intervene as necessary.

The Risk Committee of the Talanx Group monitors the capitalization and risk profile of the entire Group and ensures that the relationship between these two parameters is appropriate. The Risk Committee is also tasked with ensuring that comprehensive risk awareness is firmly anchored in the Talanx Group and with further enhancing risk controlling. In order to remain constantly updated on the risk situation at the subsidiaries, Group Risk Management holds quarterly discussions with the responsible risk officers at the subsidiaries. The responsible risk officers at the subsidiaries notify significant changes in the risk position by way of ad hoc reports to Group Risk Management.

The potential implications of risks are not only documented but also incorporated into the annual planning of the Group companies, thereby making it possible to allow for the risks of future development as well as appropriate countermeasures in a timely manner. The plans drawn up by all Group companies and for the Group as a whole are discussed and approved by the Board of Management and Supervisory Board of Talanx AG.