Risk management framework

Our risk management framework

Our Risk Management Framework (RMF) comprises our systems of governance, risk management processes and risk appetite framework. It establishes the principles and fundamental statements by which Aviva manages risk in line with its agreed risk strategy.

Our RMF applies Group-wide, ensuring a rigorous and consistent approach to risk management is embedded across the business.

Our risk appetite framework

Our risk appetite framework refers to the risks that we select in pursuit of our strategic objectives. 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 include solvency ratio risk tolerances which are expressed for some of our most material risk types.
  • 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. We refresh them on a regular basis as part of our planning process.

You can read more about our approach to risk in the Risk and Risk Management section of our Annual Report and Accounts.