AIG 2013 Annual Report Download - page 179

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.
We have an integrated process for managing risks throughout our
Enterprise Risk Management (ERM)
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 • Our ERM framework provides
integrates the risk management functions in each of our business units, senior management with a
providing senior management with a consolidated view of the firm’s major consolidated view of our risk
risk positions. Within each business unit, senior leaders and executives appetite and major risk positions.
approve risk-taking policies and targeted risk tolerance within the
framework provided by ERM. ERM supports our businesses and • In each of our business units,
management in the embedding of enterprise risk management in our key senior leaders and executives
day-to-day business processes and in identifying, assessing, quantifying, approve risk-taking policies and
managing and mitigating the risks taken by us and our businesses. targeted risk tolerance within the
Nevertheless, our risk management efforts may not always be successful ERM framework while working with
and material adverse effects on our business, results of operations, cash ERM to mitigate risks across the
flows, liquidity or financial condition may occur. firm.
• Risk management is an integral
part of how we manage our core
businesses.
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.
Our Board of Directors oversees the management of risk through its Finance and Risk Management Committee
(FRMC) and Audit Committee. Those committees regularly interact with other committees of the Board. Our 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 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, Chief Financial Officer
(CFO), General Counsel, and 15 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, Deputy AIG Chief Investment Officer, as well as our CFO, and other senior
executives from Finance and ERM. Our CRO serves as Chair of the FRG.
Overview
Risk Governance Structure
..................................................................................................................................................................................................................................
AIG 2013 Form 10-K 161
ITEM 7 / ENTERPRISE RISK MANAGEMENT
..................................................................................................................................................................................
..................................................................................................................................................................................
............................................................................................................................................................................................