Voya 2014 Annual Report Download - page 236

any financial or other support to these entities. The RMBS, CMBS and ABS entities are thinly capitalized by
design and considered VIEs. Our involvement with these entities is limited to that of a passive investor. These
investments are accounted for as investments available-for-sale as described in the Fair Value Measurements
(excluding Consolidated Investment Entities) Note in our Consolidated Financial Statements in Part II, Item 8. of
this Annual Report on Form 10-K, and unrealized capital gains (losses) on these securities are recorded directly
in AOCI, except for certain RMBS which are accounted for under the FVO, whose change in fair value is
reflected in Other net realized gains (losses) in the Consolidated Statements of Operations. Our maximum
exposure to loss on these structured investments is limited to the amount of our investment. See the Investments
(excluding Consolidated Investment Entities) Note in our Consolidated Financial Statements in Part II, Item 8. of
this Annual Report on Form 10-K for details regarding the carrying amounts and classifications of these assets.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market risk is the risk that our consolidated financial position and results of operations will be affected by
fluctuations in the value of financial instruments. We have significant holdings in financial instruments and are
naturally exposed to a variety of market risks. The main market risks we are exposed to include credit risk,
interest rate risk and equity market price risk. We do not have material market risk exposure to “trading”
activities in our Consolidated Financial Statements.
Risk Management
As a financial services company active in Retirement, Investment Management and Insurance, taking
measured risks is part of our business. As part of our effort to ensure measured risk taking, we have integrated
risk management in our daily business activities and strategic planning.
We place a high priority on risk management and risk control. We have comprehensive risk management
and control procedures in place at levels and have established a dedicated risk management function with
responsibility for the formulation of our risk appetite, strategies, policies and limits. The risk management
function is also responsible for monitoring our overall market risk exposures and provides review, oversight and
support functions on risk-related issues.
Our risk appetite is aligned with how our businesses are managed and anticipates future regulatory
developments. In particular, our risk appetite is aligned with regulatory capital requirements applicable to our
regulated insurance subsidiaries as well as metrics that are aligned with various ratings agency models.
Our risk governance and control systems enable us to identify, control, monitor and aggregate risks and
provide assurance that risks are being measured, monitored and reported adequately and effectively. To promote
measured risk taking, we have integrated risk management with our business activities and strategic planning.
Each risk that is managed has been mapped for oversight by the Board of Directors or appropriate Board
Committees. The Chief Risk Officer (“CRO”) reports to the Chief Executive Officer and has direct access to the
Board on a regular basis. The Company’s Board of Directors and Board Committees are directly involved within
the Risk Framework.
The CRO heads the risk management function and each of the businesses, as well as corporate, has a similar
function that reports to the CRO. This functional approach is designed to promote consistent application of
guidelines and procedures, regular reporting and appropriate communication through the risk management
function, as well as to provide ongoing support for the business. The scope, roles, responsibilities and authorities
of the risk management function at different levels are described in a Risk Management Policy to which our
businesses must adhere.
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