Sun Life 2015 Annual Report Download - page 58

The Board of Directors has delegated primary oversight of risk management to its Risk Review Committee, which is a standing
committee of the Board of Directors. The primary function of the Risk Review Committee is to assist the Board of Directors with
oversight of the management of risk enterprise-wide, and of the risk management function, and is responsible for actively monitoring
and advising the Board on the Company’s overall risk profile, risk appetite, and risk management strategies and for overseeing the
implementation of those strategies. The Committee promotes a balanced business and product model that seeks to achieve agreed
upon risk-adjusted returns and allocate capital accordingly and which is aligned with the Company’s agreed risk appetite. The
Committee oversees the development of risk management strategies and monitors that the risk profile is within the agreed risk appetite
of the Company. The Committee oversees policies, practices, procedures and controls related to the capital structure, compliance with
regulatory capital requirements, and recommends to the Board for approval, and monitors the annual Capital Plan. The Committee also
oversees risk management activities of our subsidiaries and risk posed to the Company through its joint venture arrangements. It
reviews and approves all risk management policies that are not otherwise assigned to other Board Committees and reviews
compliance with those policies. In addition, where the Board has allocated oversight of specific risk management policies and programs
to other Board committees, the Risk Review Committee is tasked with providing the Board with an integrated view of oversight of all
risk management programs across all Board Committees.
The Board of Directors has delegated to the Governance, Nomination & Investment Committee responsibilities related to overseeing
practices, procedures and controls related to the management of the general fund investment portfolio and monitoring of the
Investment Plan. In addition, the Committee is also responsible for developing effective corporate governance guidelines and
processes including policies and processes to sustain ethical behaviour, and developing processes to assess the effectiveness of the
Board and its Committees.
The Audit & Conduct Review Committee is responsible for assisting the Board of Directors in reviewing the integrity of financial
statements and related information provided to shareholders and others, compliance with financial regulatory requirements, review and
approval of compliance policies, adequacy and effectiveness of the internal controls implemented and maintained by management,
compliance with legal and regulatory requirements and the identification and management of compliance risk, and assessing the
qualifications, independence and performance of the external auditor.
The Management Resources Committee is responsible for assisting the Board of Directors in ensuring we have the leadership
resources for succession of senior executive positions and programs to effectively attract, retain, develop and reward executives for
achieving our strategic objectives. In addition, the Management Resources Committee reviews the design, approval and governance of
incentive programs to align business objectives and incentives, and to ensure that these incentive programs do not encourage
excessive risk taking.
Senior Management Committees
The Executive Risk Committee is responsible for providing executive oversight of the Company’s risk management activities. This
mandate includes executive oversight of the development and articulation of the Company’s risk appetite and risk limits, the processes
in place to ensure identification of major risks facing the Company and the oversight of risk management strategies and programs to
manage the risk profile within our risk appetite and overall objective of optimizing the risk and return of the Company.
The Investment & Credit Risk Committee is responsible for reviewing matters related to the management of the Company’s general
funds’ assets which includes providing oversight and direction on the current and potential credit and investment risk exposures facing
the Company and mitigating strategies to ensure that effective credit risk management practices and controls are in place.
The Corporate Asset Liability Management Committee is responsible for providing executive oversight and direction for the effective
measurement, control and management of the market and liquidity risks in the design and operation of general fund investment
strategies for efficiently discharging the Company’s general fund liabilities across a wide array of economic scenarios.
The Operational Risk & Compliance Committee is responsible for providing oversight and direction on the operational risk exposures
facing the Company and to ensure that effective operational risk management practices and controls, including compliance programs,
are in place.
The Product Oversight Committee is responsible for overseeing the risks associated with the design and pricing of products. This
includes reviewing product risk management policies, material changes to pricing methodologies and review of product strategy in
consideration of product profitability.
The Insurance Risk Committee is responsible for providing oversight and direction on insurance risk exposures facing the Company
and to ensure that effective insurance risk management practices and controls are in place.
Accountabilities
Primary accountability for risk management is delegated by the Board of Directors to our CEO, and the CEO further delegates
responsibilities throughout the Company through management authorities and responsibilities. The CEO delegates accountability for
the various classes of risk management to our executive officers, who are accountable for ensuring the management of risk in the
scope of their business accountability is in accordance with the Board-approved Risk Framework, Risk Appetite Policy and risk
management policies.
We have adopted the three lines of defence model to provide a consistent, transparent and clearly documented allocation of
accountability and segregation of functional responsibilities. This segregation of responsibility helps to establish a robust control
framework that promotes transparent and independent challenge of all risk taking activities, and encourages that all functions engage
in self-critical examination to foster continuous improvement of the management of risk in our business.
The first line of defence is represented by business segment management who own the risks that are intrinsic to the business and have
the primary responsibility to identify, measure, manage, monitor and report these risks.
56 Sun Life Financial Inc. Annual Report 2015 Management’s Discussion and Analysis