Annual Report 2023 (eng) - Flipbook - Side 50
INDUSTRIENS PENSIONSFORSIKRING A/S ÅRSRAPPORT 2023
23.
Risk management
Through its policies and guidelines, the Board of Directors of Industriens Pension determines the overall level of the
company’s risk taking and the framework for ongoing risk management.
The day-to-day management monitors risks on an ongoing basis, and ensures compliance with the frameworks
stipulated. The Board of Directors receives regular reports on compliance with individual frameworks.
Industriens Pension's attitude to risk
Industriens Pension's attitude to risk is to acknowledge that results desired are generated through controlled risk
willingness and that risks should therefore be managed and controlled; and not necessarily eliminated.
All potential risks are regularly assessed, and if the risk exceeds the acceptable level, initiatives are implemented in
order to mitigate the risk to a lower, acceptable level. Such initiatives are implemented in policies, guidelines and
internal procedures, as well as in establishment or adaptation of internal controls.
Industriens Pension aims at promoting risk awareness among its employees and the overall view on risk is therefore
integrated in the day-to-day management of the company's risk activities.
Risk identification and assessment
The most important element of Industriens Pension's risk management is to ensure that all significant risks from the
current business model and activities are identified, quantified, assessed, managed and reported.
The assessment of individual risks takes account of the risk for members, the risk faced by the company as well as
the size of the own funds to cover current solvency capital requirements.
The majority of members of Industriens Pension have a market-rate product, where each member carries most of the
risks. For these members, a key element of the risk assessment is to ensure that the individual member is not subject
to an inappropriate risk.
Every year, the Board of Directors approves an overall risk assessment, which is subsequently submitted to the Danish
Financial Supervisory Authority and communicated to all relevant employees at Industriens Pension.
Risk management in practice
In accordance with the Executive Order on Management and Control of Banks etc., separate actuary, compliance and
risk-management functions have been set up, as well as an internal audit function. Furthermore, a person has been
appointed to be responsible for each function. In addition to these functions, Industriens Pension has also appointed
a data protection officer and two persons responsible for the money laundering area; one for the member and
business area, and one for the investment area. Moreover, a whistleblower system has been set up, allowing
employees the possibility to report incidents.
NOTES
The risk function plans work on risk and regularly prepares reports on the risk area. It is crucial for Industriens Pension
that practical work on implementing management of the individual risks is rooted with the staff responsible in the
individual departments. The individual heads of department are therefore responsible for identifying new risks and
ensuring that these are mitigated with suitable controls. Errors and other inappropriate incidents are identified and
assessed. These assessments are incorporated in work on risk and to organise controls.
The risk management function regularly follows up on risks identified and checks that the controls implemented are
observed. Furthermore, the risk management function also follows up on any operational errors that occur.
Most significant risks for Industriens Pension
Current risks can be divided into market risks, business risks, as well as operational and strategic risks.
Market risk
Market risk includes risks of losses on investment assets, among others things arising from losses on shares, interest
rates, currency and properties. Also included are the risks of losses as a consequence of credit risk, counterparty risk
and liquidity risk, as well as the risks of losses following climate change and the current transition to a more
sustainable economy.
As a company, Industriens Pension is exposed to market risk on the part attributable to existing own funds as well as
provisions in the average-rate scheme and sickness and accident insurance.
The most important financial risks for members who still have a pension scheme with average interest rate, are linked
to the interaction between investment assets and current insurance obligations.
Members in the market-rate scheme carry the market risk themselves, and this is managed through a lifecycle product
for which the risk depends on the investment horizon of each member, determined on the basis of the age of the
individual member.
The risk of losses in the event of changes in exchange rates is mitigated by using derivatives.
The counterparty risk is generally mitigated by applying the "delivery versus payment" principle in connection with
securities trading and by setting frameworks for the size of transactions and demanding collateralisation for positive
fair values over a certain level on the derivatives used. Besides this, central cleaning is used as much as possible.
Insurance risks
Insurance risk includes the risk of losses because of negative changes in mortality rates, life expectancy, loss of ability
to work as well as critical illness.
Operational and strategic risks
Operational risk comprises the risk of losses attributable to internal errors in IT systems, incorrect procedures,
inadequate internal controls, fraud, cyber risks, etc.
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