AIG 2012 Annual Report Download - page 172

.....................................................................................................................................................................................
OVERVIEW
.............................................................................................................................................................. Enterprise Risk
Management (ERM)
At AIG, we have an integrated process for managing risks throughout our
organization in accordance with our firm-wide risk appetite. Our Board of • Our ERM framework provides
Directors has oversight responsibility for the management of risk. Our senior management with a
Enterprise Risk Management (ERM) Department supervises and integrates consolidated view of our risk
the risk management functions in each of our business units, providing senior appetite and major risk
management with a consolidated view of the firm’s major risk positions. Within positions.
each business unit, senior leaders and executives approve risk-taking policies
and targeted risk tolerance within the framework provided by ERM. ERM • In each of our business units,
supports our businesses and management in the embedding of enterprise risk senior leaders and executives
management in all of our key day to day business processes and in approve risk-taking policies
identifying, assessing, quantifying, managing and mitigating the risks taken by and targeted risk tolerance
us and our businesses. within the ERM framework
while working with AIG ERM to
Risk Governance Structure mitigate risks across the firm.
..............................................................................................................................................................
• Risk management is an
Our risk governance fosters the development and maintenance of a risk integral part of how we
and control culture that encompasses all significant risk categories. manage our core businesses.
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.
Our Board of Directors oversees the management of risk through its Finance and Risk Management Committee (the
FRMC) and the Audit Committee. Those committees regularly interact with other committees of the Board. Our
Executive Vice President (EVP) and Chief Risk Officer (CRO) reports to both the FRMC and AIG’s Chief Executive
Officer (CEO).
The Group Risk Committee (the GRC) is the senior management group charged with assessing all significant risk
issues on a global basis in order to protect our financial strength, optimize our intrinsic value, and protect our
reputation among key stakeholders. The GRC is chaired by our CRO. Its membership includes our CEO, EVP and
Chief Financial Officer (CFO), EVP and General Counsel, and 12 other executives from across our corporate
functions and business units. Our CRO reports periodically on behalf of the GRC to both the FRMC and the Audit
Committee of the Board.
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 AIG and its
subsidiaries. Its mandate includes overseeing our aggregate credit, market, interest rate, liquidity and model risks, as
well as asset-liability management, derivatives activity, and foreign exchange transactions. Membership of the FRG
includes our EVP – Investments, EVP and Treasurer, as well as our EVP and CFO, and other senior executives from
Finance and ERM. Our CRO serves as Chair of the FRG.
..................................................................................................................................................................................................................................
AIG 2012 Form 10-K 155
Enterprise Risk Management
At AIG, 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.
ITEM 7 / ENTERPRISE RISK MANAGEMENT
a
a
g
e
e
a
n
a
g
e
m
e
n
R
t
M
E
R
M
(
)
p
e
e
i
i
n
e
r
p
r
s
e
s
R
t
E
i
R
i
k