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Strategy implementation
Our current corporate strategy encompasses ten guiding principles that safeguard the realisation of our vision “Long-term success in a competitive business” across the various divisions. For further information on the corporate strategy and the strategic principles please see the section entitled Our strategy.
Our risk strategy is derived from the corporate strategy. The following principles of the corporate strategy constitute the key strategic points of departure for our Group-wide risk management:
- We manage risks actively.
- We maintain an adequate level of capitalisation.
- We are committed to sustainability, integrity and compliance.
The risk strategy is the core element in our handling of opportunities and risks. It specifies more closely the goals of risk management and documents our understanding of risk. We have defined eight overriding principles within the risk strategy:
- We adhere to the risk appetite set by the Executive Board.
- We integrate risk management into value-based management.
- We promote an open risk culture and the transparency of our risk management system.
- We fulfil regulatory requirements.
- We fulfil the requirements of rating agencies.
- We act in light of materiality and proportionality considerations.
- We make balanced use of both quantitative and qualitative methods.
- We ensure the independence of the risk management function.
The risk strategy, risk register and central system of limits and thresholds – as integral components of our Risk and Capital Management Guideline – are reviewed at least once a year. In this way we ensure that our risk management system is kept up-to-date.
We manage our total enterprise risk such that we can expect to generate positive IFRS Group net income with a probability of 90% p. a. and the likelihood of the complete loss of our economic capital and shareholders’ equity under IFRS does not exceed 0.03% p. a. These indicators are monitored using our internal capital model and the Executive Board is informed quarterly about adherence to these key parameters as part of regular reporting. The necessary equity resources are determined according to the requirements of our economic capital model, regulatory parameters, the expectations of rating agencies with respect to our target rating and the expectations of our clients. Above and beyond that, we maintain a capital cushion in order to be able to act on new business opportunities at any time.
| Strategic targets for risk position | ||
| Limit | 31.12.2016 | |
|---|---|---|
| Probability of positive net income under IFRS | > 90% | 98.1% |
| Probability of loss of shareholders’ equity under IFRS | < 0.03% | 0.01% |
| Probability of loss of economic equity | < 0.03% | < 0.01% |