Unum 2010 Annual Report Download - page 86

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Through adherence to these objectives, we believe we are better positioned to fulfill our corporate mission, improve and protect
stockholder value, and reduce reputational risk.
Our approach to risk management is defined by these fundamental principles:
• Our risk management strategy begins with our business strategy. We are a specialty insurance carrier focused on providing benets
through employer-sponsored plans. We have market leadership positions in the product lines we offer and more than 160 years of
experience. This combination of focused expertise and deep experience is the foundation of our approach to risk management.
• Risk management cannot be successful in a vacuum; it needs to be embedded in daily decision-making throughout the organization.
Unum Group’s board members and our senior leaders clearly acknowledge that risk management is critical to our Company’s long-
term success, and this theme cascades through the work of risk committees and the management team. Additionally, we believe the
individual and collective decisions of our employees play a key role in successfully managing our overall risk profile.
• We closely monitor emerging risks, adjust our strategies as appropriate, and hold capital levels which providenancial exibility.
We use qualitative and quantitative approaches to identify emerging risks and develop mitigating strategies to limit our exposure
to existing and potential risks.
We utilize stress testing and scenario analysis to shape our business, financial, and strategic planning activities. For example, stress
testing of our capital and liquidity management strategies enables us to identify areas of high exposure, assess mitigating actions, develop
contingency plans, and guide decisions around our capital and liquidity levels. In addition, scenario analysis is used as input in the
development of our business and strategic planning processes.
Risk Committee Structure and Role
We have a “pyramid” risk committee structure in place to govern our ERM process.
Unum Group’s board of directors has an active role, as a whole and also at the committee level, in overseeing management
of our risks. The board is responsible for managing strategic risk and regularly reviews information regarding our capital, liquidity, and
operations, as well as the risks associated with each, and receives an enterprise risk management report from our chief risk officer at least
annually, and usually more frequently. The audit committee is responsible for oversight of our risk management process, financial risk,
operational risk, and any other risk not specifically assigned to another committee. The chief risk officer provides a report on our risk and
risk management to the audit committee at least quarterly. The finance committee is responsible for oversight of risks associated with
investments and related financial matters. The human capital committee is responsible for overseeing the management of risks relating
to our compensation plans and programs; in connection with this oversight it receives an analysis from the chief risk ofcer with respect
to these risks. The regulatory compliance committee oversees management of risks related to regulatory, compliance, policy, and legal
matters, both current and emerging and whether of a local, state, federal, or international nature. While each committee is responsible for
evaluating certain risks and overseeing the management of such risks, the entire board of directors is regularly informed through
committee reports about such risks in addition to the risk information it receives directly.
An executive risk management committee is responsible for overseeing our enterprise-wide risk management program. The chief risk
officer, who is a member of the executive risk management committee, has primary responsibility for our ERM program and is supported
by a corporate risk committee and by the risk committees of the three primary operating segments that comprise Unum Group.
Operating segment risk committees for Unum US, Unum UK, and Colonial Life oversee risk specific to their business. These committees
are responsible for identifying, measuring, reporting, and managing insurance and operational risks within their respective areas, consistent
with corporate guidance.
The corporate risk committee oversees the operational, investment, and capital management subcommittees and reviews risk on a
corporate level. Market and credit risk are jointly managed by the investment committee and the asset liability committee. The capital
management committee is responsible for monitoring and planning capital allocation, financing, and liquidity.
In addition to the formal communication channels included in the risk committee structure, we provide ways for employees to report
risk directly to the chief risk officer, and we educate employees on Company risks.
Quantitative and Qualitative Disclosures
About Market Risk
84
Unum
2010