Risk team of the year: Allianz
If mimicry is the sincerest form of flattery, Allianz's risk team must feel flattered indeed.
Its "management ratio" concept – essentially to retain a 135% Solvency II solvency capital ratio in the face of the worst scenarios, averting the need to raise capital – has been applied in comparative analysis by bank analysts who praised it as "a particularly clear exposition" of targeted coverage levels after extreme events.
And Allianz's risk-based capital framework, with the risk team behind it, won plaudits from stakeholders as "a tool in its armoury" to achieve financial targets.
Other analysts called the company's Solvency II management "second-to-none".
The company also employs forward-looking return on risk capital metrics to ensure the new business uses capital efficiently, and is accretive to shareholder value. Its risk team is intricately involved in helping the group meet these, and a plethora of further targets, including regulatory ratios net of accrued dividends.
Allianz says prevailing regulatory and market dynamics – and shareholders demanding more in a climate where 'growth stories' may appear unconvincing – raise the issues of risk and capital management on insurers' agendas as "the lead role for delivering shareholder value".
It says a company, with its risk team involved, must set appropriate solvency targets aligning the company's return on equity aspirations with its risk profile, while balancing "the negative drag of capital buffers". And a company must allocate capital effectively "between financial risk taking / asset-liability management in the legacy business [and] financing of growth in new, more capital efficient businesses; and repatriating excess capital to shareholders if not used to finance profitable growth".
Here, Allianz with advanced internal capital management practices has positioned itself as a thought leader "significantly influencing capital management practices" in its industry, not just evolving its own.
Highly Commended: Aviva UK GI
The multi-faceted skills a risk team needs were highlighted in the entry from the Aviva UK GI Enterprise Risk Team, to which the judges awarded a high commendation.
In particular, the team has a commitment to consulting, coaching and challenging in an environment of growth and innovation.
The team demonstrated the broadening role of risk, far beyond more traditional regulatory duties, by supporting a number of initiatives backing the company's strategic ambitions, as well as supporting effective risk-based decision making and risk analysis by the company's board.
It scans the environment the company operates in to anticipate future challenges and to meet the evolving needs of its customers. The team has built tools which showed more engaging and accessible use of existing risk data, and invested in an enhanced emerging risk identification, measurement and management process.
Nonetheless, effectively and efficiently fulfilling regulations necessarily comprises an important part of any risk team's responsibilities. The Aviva UK GI team includes actuaries and accountants, as well as operational and IT risk specialists.
During 2017, this team redesigned and simplified the company's own risk and solvency assessment (Orsa) report to create a more engaging and insightful analysis of risk, capital and the control environment.
It also reviewed the company's overarching risk appetites, to ensure that they reflect the risk profile on an ongoing basis, and refreshed its high-level risk preference statements, to provide more granular qualitative guidance in support of both annual business planning and day-to-day decision making.
Aviva's customers are at the heart of everything the team does, the team says, whether "creating legacy" by challenging decisions to be economically optimal and sustainable, or by testing financial resilience to ensure obligations can be met in time despite extreme events.