In the business of assuming risk, a sound risk management framework is essential. In the past two years, we have introduced our approach to risk and practice of risk management at PartnerRe, demonstrating how our strategy, structure and risk management processes are inextricably linked. In the following pages, we continue the dialogue by providing an overview of PartnerRe’s approach to enterprise risk management, including an update on what we have said in the past about our risk appetite and tolerance.

Our risk management framework encompasses our approach to the strategic risks that we share with the rest of our industry, the reinsurance and capital market risks that we are paid to assume, and the operational risks that are a part of running any business.

Our approach to managing these risks to our enterprise begins with identifying, categorizing and classifying the risks that have the potential to reduce or destroy economic value or franchise value. With those identified, we focus on reducing the likelihood of occurrence and the impact of those risks. Our top business risks and how we manage them are identified on pages 12 and 13.

Through our integrated approach to risk management, we reduce the probability and severity of our business risks. In order to move top risks, classified as "high-likelihood" and "significant-impact," down the curve, we employ the following tactics, along with controls, processes and policies that are integral to how PartnerRe functions on a day-to-day basis.