Prudential 2015 Annual Report Download - page 101

• Employee risk
• Technology risk, including data security, system failures and processing errors
• Financial reporting risk
• Extreme events risk, such as loss of people and/or infrastructure caused by natural disasters, terrorism, disease, etc.
• Information risk
• Vendor risk
Each of our businesses and corporate functions is expected to manage its operational risks in compliance with enterprise standards.
Our framework for identifying, evaluating, monitoring and managing operational risk includes: risk management committees; key risk
indicators; risk and control assessments; loss event data collection and analysis; scenario analysis; and resolution of control issues. We also
have enterprise policies and standards, including: Legal and Regulatory/Compliance Policies, such as those relating to sales practices and
supervision, fraud prevention, safeguarding of personal information, protection and use of material non-public information, personal
conflicts of interest and outside business activities, anti-money laundering, and gifts and entertainment; Human Resources Policies, such as
those relating to hiring, training and terminating the employment of our associates and succession planning; and Information Technology
policies, including those on systems development and information security. We also maintain policies and standards to support the effective
management of operational risk, including those concerning new product development, business continuation and disaster recovery,
enterprise crisis management, and vendor governance. Our Internal Audit Department independently audits key operational controls on a
periodic basis to assess the effectiveness of our framework.
In order to respond to the threat of security breaches and cyber attacks, we have developed a program overseen by the Chief
Information Security Officer and the Information Security Office that is designed to protect and preserve the confidentiality, integrity, and
continued availability of all information owned by, or in the care of the Company. As part of this program, we also maintain an incident
response plan. The program provides for the coordination of various corporate functions and governance groups, and serves as a framework
for the execution of responsibilities across businesses and operational roles. The program establishes security standards for our
technological resources, and includes training for employees, contractors and third parties. As part of the program, we conduct periodic
exercises and a response readiness assessment with outside advisors to gain a third-party independent assessment of our technical program
and our internal response preparedness. We regularly engage with the outside security community and monitor cyber threat information.
We are also exposed to emerging risks, such as those conditions, situations or trends that may significantly impact us in the future. By
nature, these risks involve a high degree of uncertainty. ERM, together with our businesses, monitors and evaluates emerging risks on a
regular basis.
Model Risk Management
Models are utilized by our businesses and corporate functions primarily in projecting future cash flows associated with pricing
products, calculating reserves and valuing assets, as well as in evaluating risk and determining capital requirements, among other uses. As
our businesses continue to grow and evolve, the number and complexity of models we utilize expands, increasing our exposure to error in
the design, implementation or use of models, including the associated input data and assumptions. We are mitigating this risk by
implementing our Model Risk Policy, which outlines the governance and control requirements over the implementation and use of models,
and through the activities of our Model Risk Oversight Committee which provides oversight and guidance on issues relating to model risk
and the management of that risk.
For further information on the risks to which the Company is exposed, see “Risk Factors” included in Prudential Financial’s 2015
Annual Report on Form 10-K.
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