Annual Report IPF 2021 - Flipbook - Side 48
INDUSTRIENS PENSIONSFORSIKRING A/S
23.
ANNUAL REPORT 2021
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.
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.
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.
Most significant risks for Industriens Pension
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.
Market risk
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.
Current risks can be divided into market risks, business risks, as well as operational and strategic risks.
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.
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 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.
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.
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 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.
The risk of losses in the event of changes in exchange rates is mitigated by using derivatives.
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.
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.
Risk management in practice
Insurance risks
In accordance with the Executive Order on Management and Control of Banks etc., separate actuary, compliance and riskmanagement 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 to report incidents.
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.
These risks are mitigated with regular monitoring of errors and by establishing suitable controls.
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