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Integrated Report 2024

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Underwriting Risk Underwriting risk is an overarching risk that comprises several risks that vary between transactions. Some of the risks in this category include completion/construction risk, supplier or reserve risk, market risk and credit risk. The Corporation uses internal analysis and external expert analysis to assess and manage underwriting risk from transaction inception to end-of-life. Prudent management of the insurance book is achieved by adherence to the Corporation’s risk appetite limits and tolerance. The Corporation’s expanded mandate has heralded short-term trade as an additional line of business. Short-term trade transactions require a differentiated underwriting approval process aligned to the underlying trade instruments. Investment Risk Investment risk is the risk of a change in the actual or effective market value, earnings or future cash flows of a portfolio of financial instruments caused by volatility of market variables such as equity and bond prices, currency exchange and interest rates. Investment risk includes equity, interest rate risk, spread and default risk, and foreign exchange risk. The Corporation manages its investment portfolio on a tranching basis that ensures the its disparate

cash requirements are aligned to its investment strategy. The tranching approach minimises value erosion when commensurate asset classes are liquidated to meet the Corporation’s liquidity requirements. To ensure an optimal risk-reward balance in application of capital, the Corporation sets out risk appetite limits and tolerances that ensures commensurate capital allocation to the investment business. Increasing requirements and expectations around environmental and social (ESG) impact management by fund managers is important. In this regard, periodic manager due diligence includes a view on governance and risk management. Operational Risk The Corporation uses both leading and lagging key risk indicators (KRIs) to manage operational risks proactively. In post-pandemic era, emerging operational risks need to be identified and managed accordingly. As the Corporation embraces hybrid working conditions it is important to make sure that risk levels that could be exacerbated by reduced physical interaction are kept to within acceptable levels. Increasingly, the Corporation explores innovative ways to ensure full engagement of staff is achieved under the hybrid work arrangement, whilst emerging risks are managed to within set limits.

YOUR EXPORT RISK PARTNER

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