NAICOM has issued the guideline for developing a risk management framework for insurers and reinsurers in Nigeria.The guideline sets minimum standard required from all players neccessary for all hand to be on deck.
The guideline for developing the risk management framework comes into effect from July 1, 2012 and requires all insurers and reinsurers to establish and maintain a Risk Management Framework, which includes, but not limited to the following:
- Documented risk Management Strategy
- Dosumented Risk management Policies, procedures and Controls
- Up to date Risk Register
- A written Business Plan signed by board and ERM Committee
- A well defined Risk Governance and Responsibilities, et cetera.
- Investment Risk
- Credit Risk
- Operational Risk
- Liquidity Risk
- Reinsurance Risk
- Underwriting Risk
- Reserve Risk
- Reputational Risk
- Liquidity Risk
- Litigation Risk, etc
- Establishment of a process for identifying, controlling, mitigating and monitoring all material risks
- The Board must ensure full compliance
- Establishment of Risk Management Unit, which shall be headed by Chief Risk Officer, who shall monitor and submit periodic report to the senior management and the Board on key operational aspect of the framework and sinificant Risk Eposure
- The Board of all insurers and reinsurers shall provide the Commission with a declaration on risk management, relating to each financial year of the company.
