TIO Group Statement of Corporate Intent 1 July 2014 to 30 June 2017
Tabled paper 992
Tabled Papers for 12th Assembly 2012 - 2016; Tabled Papers; ParliamentNT
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TiO For the MAC scheme this has been expressed as a 5% probability or 1:20 year chance of breaching the Regulatory Minimum Capital Requirements solvency of 15%. This risk tolerance has been reduced from 1:7 in 2012/13. No explicit risk tolerance has been set for Banking. The approach to Banking capital management is detailed in the ICAAP. Banking has a Regulatory Minimum Capital Requirements of 10% of risk- weighted assets. TIO aims to manage its material risks within these tolerances and seeks to address the current balance of reinsurance and asset strategies to achieve the optimum level of profitability within these risk levels. 6.1 Risk and Reinsurance One of the most significant risks which TIO manages is the risk of catastrophic weather events, especially the risk of impact of cyclones affecting the Darwin urban area. TIO remains a unique business with significant concentration of risk within a small geographic area, which has historical experience of the occurrence of a 1:600 year event with Cyclone Tracy in 1974. TIO manages this risk through the appropriate purchase of reinsurance protection. APRA's prudential standards require Australian general insurers to purchase reinsurance protection to provide for the likelihood of a 1:200 year event. TIO provides for the likelihood of a 1:250 year event in determining its reinsurance program design. 6.2 TIO Group Risk Management Strategy TIO's risk management strategy is based on the Australian Standard 31000:2009 Risk Management - Principles and Guidelines and the organisation's prudential requirements. The overarching objective of TIO's Risk Management Strategy is to embed an effective risk management culture within the organisation. To manage risk TIO identifies 'material' and 'pervasive' risks that impact its ability to achieve its purpose, strategic and operational objectives. Risks are, subject to their impact on TIO's operations, categorised as 'corporate' and divisional risks. Corporate risks are those which are assessed to have the capacity to have a material impact on TIO's operations should they eventuate. All risks are allocated to 'risk owners' who are responsible for regular assessments where they review both the effectiveness of key controls and risk mitigation (treatment) plans. TIO has an extensive internal audit program which is approved and overseen by the TIO Board Audit and Risk Committee. The findings and recommendations identified in the reviews are, along with the findings and recommendations of TIO's external auditors, tracked by management as action items to improve business performance and key controls. TIO's corporate risk register is maintained in a risk and compliance application which records details of assessments, controls and treatment plans. The data captured in the application is used by management through the reporting of TIO's risk environment and effectiveness of management actions. Appendix A sets out TIO's corporate level risks and controls. TIO Group Statement of Corporate Intent 10