Risk management

Significant risks

At Munich Re Group level, we classify risks as significant if their implications are Serious enough to endanger the continued existence or reputation of the Group or of individual companies.

Specifically, we have identified the following categories from which significant risks can arise.

– Underwriting risk: Property-casualty insurance

Underwriting risk is defined as the risk of insured losses in property-casualty business (insurance and reinsurance) being higher than our expectations.
Significant risks in property-casualty insurance are the premium and reserve risks.

– Underwriting risk: Life and health insurance

The underwriting risk in this case is defined as the risk that insured benefits payable in life or health business (insurance and reinsurance) may be higher than expected.

– Market risk

We define market risk as the risk of economic losses resulting from changes in values in the capital markets.

– Credit risk

We define credit risk as the financial loss that Munich Re could incur as a result of changes in the financial profile of a counterparty, issuer of securities or other debtor with liabilities to our Group.
In addition to credit risks arising out of investments and transactions with suppliers and clients, we actively assume credit risk through the writing of insurance and reinsurance business.

– Operational risk

Munich Re defines operational risks as potential losses resulting from inadequate processes, technical failure, human error or external events.

– Liquidity risk

Our objective in managing liquidity risk is to ensure that we are in a position to meet our payment obligations at all times.

– Strategic risk

Munich Re defines strategic risk as the risk of making wrong business decisions, implementing decisions poorly, or being unable to adapt to changes in its operating environment.

– Reputational risk

Reputational risk is the risk of a loss resulting from damage to the Group’s public image (for example with clients, shareholders or other parties).