Risk Report 27
Dimension Risk appetite statement
Capital and Liquidity LV= will hold sufficient solvency capital and liquidity to ensure that the group
can continue to trade following an adverse movement in markets.
Earnings The volatility of LV=’s earnings is consistent with the reasonable expectations
of with-profits policyholders and other stakeholders.
Brand The group will always seek to uphold its brand image and its vision to be
‘Britain’s best-loved insurer’.
Regulatory LV= has no appetite for regulatory weaknesses or failings that lead
to censure actions.
Operational & Capability The group seeks to minimise operational risk events across the business.
Risk governance
The roles and responsibilities for risk management are based on the ‘three lines of defence’ model.
The businesses and support functions are responsible for risk taking, implementing the risk management
framework and embedding the risk culture (first line of defence). The risk function is accountable for
overseeing and challenging the identification, measurement, management, monitoring and reporting of key
risks and for developing the risk management framework (second line of defence). The internal audit team
provides an independent assessment of the risk framework and the internal control processes (third line
of defence).
The businesses and support functions are responsible for ensuring that the controls are effective and will
report to the board on any control weaknesses.
The Board Risk Committee helps the board to oversee risk and risk management across LV=. The
businesses and support functions have established Asset and Liability Committees (ALCOs) and Risk
Committees to assist them in the execution of their first line of defence responsibilities, and the chief risk
officer chairs the Group Executive Risk Committee to support the execution of the second line of defence
responsibilities. These relationships are summarised in the diagram below.
Statements and Reviews
To support a consistent and rigorous approach to risk management across LV=, the risk function has
established a set of formal risk policies and risk standards. These policies and standards detail the
management and control requirements for the group and are reviewed regularly to ensure they align
with any changes in the external environment or in the business strategy.
As part of this approach the businesses and support functions are required to regularly identify and review
their risk exposures and risk controls. Where any risks are outside of appetite, action plans are put in place
which are reviewed and monitored by the Group Executive Risk Committee.
Our Businesses
The risk function then aggregates and reports the risks along with an assessment against the risk appetite
and risk limits to the Board Risk Committee. This reporting also assesses emerging risks and the results of
the thematic reviews performed in respect of the group’s products and processes.
Roles and responsibilities Relationships
Risk Management
Board and Board Risk Committee
l Set strategic objectives LV= Board
l Monitor performance
l Set risk appetite
l Set and uphold values
Board Risk
l Approve risk policies Committee
Second line: Chief Risk Officer
Corporate Governance
l Set business standards
l Monitor performance Group Executive
l Oversee risk & capital management Risk Committee
l Provide challenge
l Recommend risk management activity
First line: Chief Executive/Business & Support Functions
Business Risk Committees
l Oversee risk management
l Monitor risk and capital profile Group and
Monitor business performance Business Asset and Liability
Our Accounts
l
l Operate in line with agreed policy Committees Delegation
l Report to the second line and board Review