ING Direct 2011 Annual Report Download - page 271

Insurance US
Chief Financial Officer
Heads of Corporate
Functions
CRO Investment
Management
CRO Annuity
Mfg. & Closed
Block VA
CRO Financial
Products
CRO
Retirement
CRO
Retail Life
CRO Employee
Benefits
Insurance
Risk
Operational
Risk
Risk
Integration
Capital Markets
Risk
Model
Risk
Risk
Governance
Insurance US
Chief Executive Officer
ING Group
Chief Rick Officer
Insurance US
President & Chief
Operating Officer
Business Unit
CEOs
Insurance US
Chief Risk Officer
Business Unit Risk Management
Enterprise Risk Management
US Executive Committee
Risk management continued
ING Insurance US
Risk Management Function
The Chief Risk Officer bears primary and overall responsibility for the risk management function within ING Insurance US, which identifies,
measures, monitors and reports risk within ING Insurance US. The risk function maintains and updates the policy framework, develops
andmaintains risk methodologies and advises on the risk tolerance and risk profile. The CRO makes sure both the Supervisory Board
andMB AIH are well informed and understand ING Insurance US’s risk position at all times.
The ING Group CRO has delegated the day-to-day Risk Management within ING Insurance US to the ING Insurance US CRO. The ING
Insurance US CRO’s department (US Enterprise Risk Management) consists of several risk functions that support the overall business unit
and ING Insurance US risk management activities.
Risk committees are established at the ING Insurance US and business unit levels. The Chief Risk Officers of the business units have
areporting line to the ING Insurance US CRO.
Product Approval and Review Process
A critical aspect of risk management is that all new products are designed, underwritten and priced appropriately. Within ING Insurance
US this is safeguarded by the Product Approval and Review Process (PARP). This standard includes requirements to risk profile, traditional
and value-oriented pricing metrics, targets and documentation. The PARP includes requirements to assess market risks, insurance risk,
compliance risk, legal risk, credit risk, operational risk as well as assessment of the administration and accounting aspects of the product.
Customer suitability is integral part of the PARP requirements.
Reserve adequacy
US ERM instructs and supervises all ING Insurance US entities to ensure that the total insurance liabilities of ING Insurance US are tested
for adequacy taking into account the insurance premium rate levels and the uncertainty of future returns on investments. This is done by
evaluating insurance liabilities on current best estimate actuarial assumptions plus a risk margin, ensuring that the reserves remain
adequate based on current assumptions. The assumed investment earnings are a combination of the run-off of portfolio yields on existing
assets and new money and reinvestment rates. For new money and reinvestments long-term best estimate assumptions are taken into
account, although current new money rates are used for the short-term reinvestments. For most products stochastic testing is required,
taking the 90% point as the testing outcome. In the case where deterministic testing is used the 90% confidence level is achieved by
subtracting risk margins of the best-estimate scenario.
Policies
ING has a framework of risk policies, procedures, guidance and practice notes in place to create consistency throughout the organisation,
and to define minimum requirements that are binding on all business units. The governance framework of the business units aligns with
the Insurance level framework and meets local (regulatory) requirements. Senior Management is responsible to ensure policies, procedures
and standards are implemented and adhered to. Policies, procedures, guidance and practice notes are regularly reviewed and updated via
the relevant risk committees to reflect changes in markets, products, guidance and emerging best practices.
1 Who we are 2 Report of the Executive Board 3 Corporate governance 4 Consolidated annual accounts 5 Parent company annual accounts 6 Other information 7 Additional information
269ING Group Annual Report 2011