PIN 2.3 PIN 2.3 Management of particular risks
Insurermust develop, implement and maintain a risk management system to identify and address balance sheet and market risk, including but not limited to:(a) reserving risk;(b) investment risk (including risks associated with the use of derivatives);(c) underwriting risk;(d) claims management risk;(e) product design and pricing risk; and(f) liquidity management risk.
Insurermust develop, implement and maintain a risk management system to identify and address credit quality risk.
Insurermust develop, implement and maintain a risk management system to identify and address the non-financial or operational risk of that Insurer, including but not limited to:(a) technology risk (including processing risks);(b) reputational risk;(c) fraud and other fiduciary risks;(d) compliance risk;(e) outsourcing risk;(f) business continuity planning risk;(g) legal risk; and(h) key person risk.
Insurermust develop, implement and maintain a risk management system to identify and address reinsurance risk. Reinsurance risk refers to risks associated with the Insurer'suse of reinsurance arrangements as cedant.
Without limiting the generality of PIN Rule 2.3.4, an
Insurer'srisk management system in respect of its use of reinsurance arrangements must include the development, implementation and maintenance of a written reinsurance management strategy, appropriate to the size and complexity of the operations of the Insurer, defining and documenting the Insurer'sobjectives and strategy in respect of reinsurance arrangements.
PIN 2.3.6 PIN 2.3.6
Insurermust develop, implement and maintain a risk management system which includes an explicit asset-liability management (ALM) policy, which must clearly specify the nature, role and extent of ALM activities and their relationship with product development, pricing functions and investment management.[Added] DFSA RM99/2012 (Made 24th July 2012) [VER12/07-12]
PIN 2.3.6 Guidance1. An
Insurer'sALM policy should be appropriate taking into account the nature, scale and complexity of its ALM risks.2. The ALM policy should include details as to how:(a) the investment and liability strategies adopted by the Insurerallow for the interaction between assets and liabilities;(b) the correlations are taken into account;(c) the liability cash flows will be met by cash inflows; and(d) the valuations of assets and liabilities will change under an appropriate range of different scenarios.[Added] DFSA RM99/2012 (Made 24th July 2012) [VER12/07-12]
PIN 2.3.7 PIN 2.3.7
For the purposes of PIN Rule 2.3.6, an
Insurermay:(a) take into account:(i) its position within the Group,(ii) the materiality of the risk to which it is exposed because of its membership of the Group, and(iii) the access that it has to the systems and controls of other members of its Groupand any information produced by them or by Associates; and(b) consider together Groupswhose Holding Companiesare all members of the same Group, except for any Groupof which the Insureris the Holding Company.
PIN 2.3.7 Guidance
The effect of PIN Rule 2.3.7(b) is that, where an
Insureris a member of two or more Groupsthat are also sub- Groupsof a single Group, the Insurermay consider that Groupas a whole for the purposes of this section. An Insurerthat is a Holding Companyis however still required to give specific consideration to the risks to which it is exposed as Holding Company.