Risk management framework

Our risk management framework

Our risk management framework (RMF) sets out our all-encompassing approach to risk management throughout Aviva, designed to identify, measure, manage, monitor and report the principal risks to the achievement of the Group’s business objectives.

Our RMF is made up of several key components, including sub-frameworks for risk appetite and key risk categories, as well as our risk policy, governance, processes, procedures, systems and desired behaviours and attitudes for risk management. It is codified through risk policies, business standards and frameworks which set out the approach to risk management, risk appetite and the minimum requirements and key controls for the Group’s operations.

Our risk appetite framework

Our risk appetite framework outlines to the risks that we select and manage in pursuit of return, the risks we accept and retain at a moderate level as part of doing business and the risks we actively avoid or take action to mitigate as far as practical. It comprises:

  • Risk appetites: Quantitative or qualitative overarching statements that express the level of risk the business is willing to accept (e.g. the amount of capital we are prepared to put at risk in the case of the solvency risk appetite). These are set at an aggregate level sometimes covering multiple risk types and act as hard constraints. The group has risk appetites for Solvency, Liquidity, Operational, Climate, Conduct and Reputational risk.
  • Risk preferences: Qualitative statements that express where the business prefers to take risk (or else accept or avoid) and why, applied to individual risk types (e.g. equity and longevity).
  • Risk tolerances: Quantitative or qualitative boundaries that may constrain specific risk-taking activities for individual risk types or combinations of risk types. Risk tolerances are in place for some of the most material risk types driving solvency and liquidity.
  • Risk Triggers: Thresholds used to monitor the capital exposure for other individual risk types (typically not already covered by a specific risk tolerance).
  • Risk limits: Quantify more granular limits for specific defined risk exposures (e.g. maximum credit exposure limits to particular counterparties). 

Our risk appetites and preferences are clearly defined and are refreshed on a regular basis. The framework is applied at both a Group and individual Business Unit level.

You can read more about our approach to risk in our Annual Report and Accounts, which you can find on our reports page.