Directors’ Report
Management of Material Risks The RMF outlines ClearView’s material risks from a strategic, customer, business and financial perspective. For each material risk and associated sub-categories the RMF articulates the mitigation strategy as well as the policy, governance elements and responsibilities for management. The material risk categories for ClearView are as follows: • Financial • Strategic • Insurance • Conduct • Operational • Legal and Regulatory (Compliance) For each material risk, ClearView has set out the following: • The maximum level of risk (risk tolerance) that it is willing to operate within, expressed as a risk limit and based on its risk appetite, risk profile and capital strength. Risk tolerances translate risk appetite into operational limits for the day-to-day management of material risks, where possible; • The process for ensuring that risk tolerances are at an appropriate level, based on an estimate of the impact if risk tolerance is breached, and the likelihood that each material risk is realised; and • The process for monitoring compliance with each risk tolerance and for taking appropriate action if it is breached; and the timing and process for review of the risk appetite and risk tolerances. The Board and management remain committed to continuously improving the RMF to ensure robust risk management practices are in place across ClearView supported by a strong risk culture. The Group Risk and Compliance function maintains and executes an annual work plan which enables the business to focus on specific areas of activity to continue to improve our maturity. Risk Culture in ClearView ClearView considers a strong risk culture as the foundation of good risk management, ClearView’s risk culture is an integral part of its corporate values and underpins the RMF. ClearView’s interpretation of risk culture aligns with APRA’s expectation citing: ‘the norms of behaviour for individuals and groups within an organisation that determine the collective ability to identify, understand, openly discuss and act on the organisation’s current and future risk’. Risk culture is recognised as not static, but rather a continuous
• The Risk Culture Framework ( RCF ) describes the shared values and behaviours, and makes clear the expectation of all ClearView staff to consider, identify, understand, discuss, and manage current and emerging risks. The Business Plan identifies and considers the material risks associated with ClearView’s strategic objectives on a rolling three-year basis. An Internal Capital Adequacy Assessment Process ( ICAAP ) is a key element of the RMF. An integrated approach to capital adequacy and risk management is adopted to ensure ClearView holds adequate levels of capital appropriate to our risk profile and risk appetite. This involves risk management practices such as stress testing to understand, manage and quantify the Group’s risks in extreme circumstances. The outcomes of the testing are used to inform risk decisions, set capital buffers and assist in strategic planning. ClearView has adopted a three lines of risk responsibility model to risk management, whereby all employees are responsible for identifying and managing risk and operating within the risk profile and appetite. The first line comprises the business units which have ownership of risks and are responsible for day-to-day risk management decision-making involving risk identification, assessment, mitigation, monitoring and management. The second line is the Group’s Risk and Compliance ( GRC ) function which assists the Board, the Board Risk and Compliance Committee ( Risk Committee ) and executive leadership team ( ELT ) in the ongoing development and maintenance of the RMF to support the company in operating within its approved risk appetite. The third line is the internal audit function that provides independent assurance to the Board, regulators and other stakeholders on the effectiveness of risk management, internal controls and governance. The Group’s Board has overall responsibility for the establishment and oversight of the risk management framework. The Risk Committee is responsible for developing and monitoring the risk management policies and reports regularly to the relevant Boards on its activities. The Risk Committee oversees how management monitors compliance with the risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Board Audit Committee ( Audit Committee ) is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.
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ClearView Wealth Limited
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