MMI’s risk philosophy recognises that managing risk is an integral part of generating sustainable shareholder value and enhancing stakeholder interests.

Risk icon

Risk management strategy

MMI’s key risk management strategies are to:

  • Understand the nature of the risks MMI is exposed to, the range of outcomes under different scenarios, and the capital required for assuming these risks.
  • Manage shareholder value by generating a long-term sustainable return on the capital required to back the risks assumed.
  • Ensure the protection of client interests by maintaining adequate solvency levels.
  • Ensure that capital and resources are strategically focused on activities that generate the greatest value on a risk-adjusted basis.
  • Create a competitive long-term advantage in the management of the business with greater demonstrated responsibility to all stakeholders.

Introduction

MMI’s risk philosophy recognises that managing risk is an integral part of generating sustainable shareholder value and enhancing stakeholder interests. It also recognises that an appropriate balance should be struck between entrepreneurial endeavour and sound risk management practice.

Risk management enables management to deal with uncertainty and its associated risks and opportunities effectively, enhancing the capacity to build value.

The MMI board is ultimately responsible for the end-to-end process of risk management, and for assessing its effectiveness. Management is accountable to the board for designing, implementing and monitoring the process and for integrating it into the day-to-day activities of the group.

The board discharges these responsibilities by means of frameworks and policies approved and adopted by the board and its designated committees that direct the implementation and maintenance of adequate processes for corporate governance, compliance, and risk management. The risk management framework applies to all the divisions, business units, subsidiaries and activities of MMI.

Risk appetite

MMI’s risk appetite is formulated by the Group Executive Committee and approved by the Board Risk, Capital and Compliance Committee, and expresses the level and type of risk which MMI is prepared to seek, accept or tolerate in pursuit of its strategic objectives.

The risk appetite includes quantitative boundaries on risk exposure and the group’s economic capital requirements, supported by a detailed risk strategy. The risk strategy, which is also approved by the Board Risk, Capital and Compliance Committee, provides a qualitative specification of MMI’s appetite for exposure to the different types and sources of risk.

The setting of risk appetite is fundamentally driven by the dual, and at times conflicting, objectives of creating shareholder value through risk taking, while providing financial security for customers through appropriate maintenance of the group’s ongoing solvency. MMI’s appetite for exposure to the different types and sources of risk is aligned with the strategic vision of MMI to be the preferred lifetime financial wellness partner of our clients, with a reputation for innovation and trustworthiness.

Risk taxonomy

MMI actively manages the following risk categories:

  • Life insurance risk
  • Non-life insurance risk
  • Credit risk
  • Market risk
  • Liquidity risk
  • Strategic, business and reputational risk
  • Operational risk

For further detail on the above risks and their management, please refer to the notes on pages 183 to 224 of the annual financial statements and on the MMI Holdings website www.mmiholdings.com.