Risk Management | Realizing Sustainability Governance | Corporate Governance | Shin Kong Life Sustainability
Risk Management
Undertaking risks and safeguarding the rights and interests of policyholders are critical keys to maintaining stable operations. To ensure the rights and interests of our vast number of policyholders and shareholders, in addition to financial aspects, we also incorporate climate change risks, emerging risks, ESG, and other issues into our risk management framework. This allows us to build a solid and efficient risk management mechanism for all potential operational risks, continuously creating value for our shareholders and policyholders.
Risk Management Organizational Structure and Systems
To effectively plan, supervise, and implement risk management and establish an effective risk management organizational structure, we adopt the three lines of defense for internal control. The Board of Directors serves as the highest supervisory and decision-making unit for risk management, under which the Risk Management Committee is established. Convened by an independent director and meeting quarterly in principle, the committee elevates risk management to a strategic position, demonstrating our firm commitment to risk management. For major risks faced in business operations, relevant risk indicators are formulated, incorporated into the overall risk management report of the Risk Management Committee, and reported to the Board of Directors on a quarterly basis to reflect the implementation of risk management and propose necessary improvement recommendations.
SKL Risk Management Committee
First Line of Defense |
Responsible for and continuously managing relevant risks arising from operational activities, executing risk management procedures, and maintaining effective internal controls. |
Second Line of Defense |
Formulating overall policies and establishing management systems for each major risk category to assist and supervise the first line of defense in risk management and self-assessment execution. Establishing an independent and effective risk management mechanism to assess and supervise overall risk-taking capacity and the current status of risk exposure, as well as determining risk response strategies and compliance with risk management procedures. Regularly reporting risk management results to senior management. |
Third Line of Defense |
Assisting the Board of Directors and senior management in auditing and evaluating whether the risk management and internal control systems are operating effectively, which includes evaluating the effectiveness of risk monitoring implemented by the first and second lines of defense, and providing timely recommendations for improvement. |
Main risk management measures
The Company established its risk management policy as the highest guiding principles for the implementation of risk management. The policy is aligned with the Company's business goals, has clear implementation guidelines, and emphasizes operational risk management. The four pillars of risk management were established on this basis, and operational risks are managed in response to changes in external regulations or the environment. Shin Kong Life Insurance periodically prepares Own Risk and Solvency Assessment (ORSA) reports, and assesses its current risk management and solvency. We defined material and relevant risks based on the nature, scale, and complexity of risks related to our business, and carried out risk identification, quantified assessment, supervision and management, and results reporting.
The Four Pillars of Risk Management
01
Risk Management Culture
Establish a top-down risk management ethos, instilling every employee with a "sense of accountability" regarding risk management.
02
Risk Management Mechanism
Management mechanisms are categorized into three hierarchical levels from top to bottom: risk management policies, management regulations for various types of risks, and standard operating procedures or standards for executing various risks. Furthermore, emergency reporting mechanisms, crisis management procedures, and business continuity management mechanisms are established to promptly handle incidents and mitigate losses.
03
Risk Measurement Tools
- Establish or strengthen measurement models for market risk, credit risk, operational risk, climate change risk, and other categories.
- Evaluate the impact extent of abnormal and major events through stress testing.
04
Risk Performance System
To balance risk and return, the company adopts the ethos of Risk-adjusted Performance Measure (RAPM), incorporating risk management into performance appraisals and establishing relevant evaluation indicators.
Business continuity management mechanism
We are committed to reviewing the possible impacts of changes in the internal and external environments to ensure business continuity. Regular drills are also conducted to make sure that business continuity plans are appropriate and effective and continuously enhanced.
Business Continuity Management Policy
We deeply value human life and are dedicated to the well-being of society. To protect the long-term interests of our customers and all stakeholders, Shin Kong Life has established and actively maintains a Business Continuity Management System (BCMS). This system allows us to effectively respond to various threats, adapt to a rapidly changing environment, withstand business disruptions, and enhance our resilience and rapid recovery capabilities during major incidents.
We are committed to reviewing the possible impacts of changes in the internal and external environments to ensure business continuity. Regular drills are also conducted to make sure that business continuity plans are appropriate and effective and continuously enhanced.
| When multiple major emergency events (such as information service interruptions, large-scale epidemics, and earthquakes) occur, they may cause Shin Kong Life to face operational interruptions or the inability to run certain critical business operations. Following ISO 22301 and relevant regulatory requirements, the Company has established a business continuity management mechanism and continuously obtains the British Standards Institution (BSI) "ISO 22301 Business Continuity Management System (BCMS)" international standard certification every year, thereby reducing the probability or extent of damage from business interruptions and enhancing the capability to respond to and rapidly recover from major events. |
| Through comprehensive Business Impact Analysis (BIA) and Risk Assessment, we identify critical operating activities and inventory the resources required to recover these activities (such as personnel and equipment), formulate recovery strategies, and establish business continuity plans (BCP). We conduct business continuity drills and tests every year while deepening and broadening the scope of the drills. Furthermore, we strengthen business continuity capability audits for the company's external partners and suppliers to ensure that business continuity plans align with the company's business continuity objectives. |
SDGs
