Sampo Group

Annual Report 2011
Earnings Logic and Risks
Risk Governance Framework

The Objectives, Tasks and Motivation of the Risk Management Process

The core competences of Sampo Group's business are skillful pricing of risks, selection of risks and proper risk and capital management. A high quality risk management process is a necessary prerequisite for successful business.

In Sampo Group, the key objectives for risk management are

  • to ensure that all the risks affecting the profitability and other material risks are identified, assessed and analyzed;
  • to ensure that capitalization – in the form of capital and foreseeable profitability of businesses – is adequate in terms of current risks inherent in business activities and existing business environment;
  • to ensure that risk bearing capacity is allocated into different business areas according to chosen strategies and that risks are properly priced;
  • to limit and mitigate fluctuations in the economic values of Group companies; and
  • to ensure the overall efficiency, security and continuity of operations.

To meet these objectives Sampo Group’s risk management process includes following tasks depicted in the 'Risk management process' figure.

 

A high-quality risk management process provides shareholder value for the following reasons

  • Clients get reliable service from a reputable institution with an effective risk management.
  • Risk premium required by investors will be smaller when risks are transparent and the risk management process is clearly described and communicated.
  • The motivation of the personnel strengthens when strategies, authorizations, limits, targeted return and reward criteria are clearly defined and communicated.
  • Supervisory authorities’ confidence in company’s ability to control the risks associated with its activities further bolsters co-operation with the authorities.

Earnings Logic and Risks
Risk Governance Framework