Unum 2014 Annual Report Download - page 83

UNUM • 2014 ANNUAL REPORT 81
Our ERM framework is the ongoing system of people, processes, and tools across our Company under which we intend to function
consistently and collectively to identify and assess risks and opportunities, to manage all material risks within our risk appetite, and to
contribute to strategic decision making. With the goal of maximizing shareholder value, the primary objectives of our ERM framework are
to support Unum Group in meeting its operational and financial objectives, maintaining liquidity, optimizing capital, and protecting
franchise value.
Risk Culture and Governance
We employ a decentralized risk management model under which risk-based decisions are made daily on a local level. To achieve long-
term success, we believe risk management must be the responsibility of all employees. The individual and collective decisions of our
employees play a key role in successfully managing our overall risk profile. We strive for a culture of accountability, risk management, and
strict compliance, and we believe these values allow our employees to feel comfortable identifying issues as well as taking ownership for
addressing potential problems.
Our risk culture is reinforced by our system of risk governance. We employ a multi-layered risk control system. Our three lines of
defense model is depicted below.
1st Line: Own and Manage 2nd Line: Oversee 3rd Line: Independent Assurance
Business processes and procedures Management committees chartered Independent review
employed throughout the Company with oversight of activities within of ERM framework
through which management assumes the 1st and 2nd lines of defense, and risk mitigation
and monitors significant risks mitigation of substantial exposures,
and management of emerging risks
Business units are primarily responsible for managing their principal risks. Our risk committees and other management committees
serve risk and control functions responsible for providing risk oversight, or the second line of risk control. The internal audit team provides
a second level of independent review, or our third line of risk control. The risk and finance committee of Unum Group’s board of directors
(the board) oversees the entire ERM governance process, effectively providing independent review for our third line of risk control.
The board has an active role, as a whole and through its committees, 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. The risk and finance committee of the board is responsible for oversight of our risk management process, including financial risk,
operational risk, and any other risk not specifically assigned to another board committee. It also is responsible for oversight of risks
associated with investments, capital and financing plans and activities, and related financial matters, including matters pertaining to our
Closed Block segment. The audit committee of the board is responsible for oversight of risks relating to financial reporting risk and certain
operational risks. The human capital committee of the board is responsible for oversight of risks relating to our compensation plans and
programs. The regulatory compliance committee of the board is responsible for oversight 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 is regularly informed through
committee reports about such risks in addition to the risk information it receives directly.
The 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 corporate risk committees and by the risk committees of our primary operating segments.
Operating segment risk committees for Unum US, Unum UK, Colonial Life, and Closed Block are responsible for oversight of risks specific
to their businesses. These committees are responsible for identifying, measuring, reporting, and managing insurance and operational risks
within their respective areas, consistent with enterprise risk management guidance. Corporate risk committees and other management
committees oversee the operational, global technology services, investment, and capital management risks on a corporate level.