AIG 2015 Annual Report Download - page 170

ITEM 7 / ENTERPRISE RISK MANAGEMENT
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Enterprise Risk Management
Risk management includes the identification and measurement of various forms of risk, the establishment of risk thresholds
and the creation of processes intended to maintain risks within these thresholds while optimizing returns. We consider risk
management an integral part of managing our core businesses and a key element of our approach to corporate governance.
Overview
We have an integrated process for managing risks throughout our organization
in accordance with our firm-wide risk appetite. Our Board of Directors has
oversight responsibility for the management of risk. Our Enterprise Risk
Management (ERM) Department supervises and integrates the risk
management functions in each of our business units, providing senior
management with a consolidated view of the firm’s major risk positions. Within
each business unit, senior leaders and executives approve risk-taking policies
and targeted risk tolerance within the framework provided by ERM. ERM
supports our businesses and management in the embedding of enterprise risk
management in our key day-to-day business processes and in identifying,
assessing, quantifying, managing, monitoring and reporting, and mitigating the
risks taken by us and our businesses. Nevertheless, our risk management
efforts may not always be successful and material adverse effects on our
business, results of operations, cash flows, liquidity or financial condition may
occur.
Enterprise Risk Management
(ERM)
 Our ERM framework provides senior
management with a consolidated
view of our risk appetite and major
risk positions.
 In each of our business units, senior
leaders and executives approve risk-
taking policies and targeted risk
tolerances within the ERM framework
while working with ERM to mitigate
risks across the firm.
 Risk management is an integral part
of how we manage our core
businesses.
Risk Governance Structure
Our risk governance structure fosters the development and maintenance of a risk and control culture that encompasses all
significant risk categories. Accountability for the implementation and oversight of risk policies is aligned with individual
corporate executives, with the risk committees receiving regular reports regarding compliance with each policy to support risk
governance at our corporate level as well as in each business unit. We review our governance and committee structure on a
regular basis and make changes as appropriate to continue to effectively manage and govern our risks and risk-taking.
Our Board of Directors oversees the management of risk through its Risk and Capital Committee (RCC) and Audit Committee.
Those committees regularly interact with other committees of the Board of Directors. Our Chief Risk Officer (CRO) reports to
both the RCC and our Chief Executive Officer (CEO).
The Group Risk Committee (GRC): The GRC is the senior management group charged with assessing all significant risk
issues on a global basis to protect our financial strength, optimize our intrinsic value, and protect our reputation. The GRC is
chaired by our CRO. Its membership includes our CEO, Chief Financial Officer (CFO), and other executives from across our
corporate functions and business units. Our CRO reports periodically on behalf of the GRC to both the RCC and the Audit
Committee of the Board of Directors. Our CRO is also a member of the management strategy committee providing ERM the
opportunity to review, monitor and consider the impact of changes in strategy.
Management committees that support the GRC are described below. These committees are comprised of senior executives
and experienced business representatives from a range of functions and business units throughout AIG and its subsidiaries.
These committees are charged with identifying, analyzing and reviewing specific risk matters within their respective mandates.
Financial Risk Group (FRG): The FRG is responsible for the oversight of financial risks taken by us and our subsidiaries. Its
mandate includes overseeing our aggregate credit, market, interest rate, capital, liquidity and model risks, as well as asset-