Allstate’s Enterprise Risk and Return Council (ERRC), a senior management committee appointed by the CEO and chaired by the Chief Risk Officer (CRO), directs enterprise risk and return management by establishing risk-return targets, determining economic capital levels and directing integrated strategies and actions from an enterprise perspective.
Among others, ERRC members include the CEO, enterprise and business unit Chief Risk Officers and Chief Financial Officers, General Counsel and Treasurer. The ERRC convenes monthly to assess and manage the various risks and opportunities faced by the company, which may include topics such as climate change.
The Board is responsible for the oversight of Allstate’s business and management, including risk management. In exercising this responsibility, the Board regularly reviews strategy; business plans for Allstate’s property and casualty business, life insurance and annuity business, and investment portfolio; liquidity and use of capital; and legal, regulatory, and legislative issues. Twice a year, the Board reviews Allstate’s risk management objectives and processes. On a quarterly basis, the Audit Committee discusses risk assessment and risk management processes with management.
Managing Climate Risks
Climate risk is among some of the enterprise risks and opportunities that are regularly managed by Allstate. We use fluid risk identification processes to reflect a continuously shifting external and internal risk environment. Business area risk owners identify risks and opportunities throughout the year, and Allstate monitors significant risk exposures in comparison to enterprise action plan targets quarterly through a comprehensive Enterprise Risk & Return Dashboard prepared for the ERRC and the Audit Committee of the Board of Directors.
This report captures potential risks related to climate such as catastrophic weather events and other factors such as auto and homeowner insurance claim frequencies and severities, business continuity and disaster recovery planning, and investment concentration. Regulatory, customer behavior changes, reputational and weather-related risks and opportunities are also considered. Financial modeling, scenario testing and management judgment are used to assess the significance of risks and opportunities including materiality.
Read more about our risk-management systems and the risk factors identified in 2011 in our Annual Report or in our Audit Committee Charter.