AIG 2013 Annual Report Download - page 81

Risk management is an integral part of managing our businesses. It is a
Risk Management
key element of our approach to corporate governance. We have an
integrated process for managing risks throughout the organization. The
framework of our Enterprise Risk Management (ERM) system provides • We remain committed to adhering
senior management with a consolidated view of our major risk positions. to the highest standards of risk
management and corporate
Our risk management process includes: governance.
An enhanced risk governance structure that supports consistent
and transparent decision making. We have revised our corporate • We continue to promote awareness
policies to ensure that accountability for the implementation and oversight and accountability for key risk,
of each policy is better aligned with individual corporate executives while business decisions, and
specialized risk governance committees already in operation receive performance.
regular reporting regarding policy compliance.
• We manage risks better by
Risk committees at our corporate level as well as in each business applying performance metrics that
unit that manage the development and maintenance of a risk and enable us to assess risk more
control culture encompassing all significant risk categories. Our clearly and address evolving
Board of Directors oversees the management of risk through the market conditions.
complementary functioning of the Finance and Risk Management
Committee (the FRMC) and the Audit Committee, as well as through its
regular interaction with other committees of the Board.
A capital and liquidity stress testing framework to assess our aggregate exposure to our most significant
risks. We conduct enterprise-wide stress tests under a range of scenarios to better understand the resources
needed to support our subsidiaries and AIG Parent.
Prior period revenues and expenses were conformed to the current period presentation. These changes did not
affect Net income attributable to AIG. The results of the investments in life settlements, including investment income
and impairment losses, were reclassified from AIG Property Casualty operations to AIG’s Other Operations. Also, as
a result of the interest in AerCap to be acquired by AIG in connection with the announced agreement to sell ILFC to
AerCap, ILFC operating results, which were previously presented as discontinued operations, have been classified as
continuing operations in all periods. The associated assets and liabilities of ILFC continue to be classified as
held-for-sale at December 31, 2013 and 2012. For further discussion, see Notes 1, 3 and 4 to the Consolidated
Financial Statements.
Strategic Outlook
Our business is affected by industry and economic factors such as interest rates, credit and equity market conditions,
catastrophic claims events, regulation, tax policy, competition, and general economic, market and political conditions.
We continued to operate under difficult market conditions in 2013, characterized by factors such as historically low
interest rates, instability in the global markets due to the negotiations over the U.S. debt ceiling, the U.S. Government
shutdown and slow growth in the U.S. economy.
Although there was a rise in interest rates in the U.S. fixed income market during the second half of 2013, interest
rates remain low relative to historical levels, which has affected our industry by reducing investment returns. In
Risk Management Highlights
Our Risk Management Process
Presentation Changes
Industry Trends
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AIG 2013 Form 10-K 63
ITEM 7 / EXECUTIVE SUMMARY
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