The role of the Control Functions in compensation
The role of Swiss Re’s Control Functions (defined as Group Risk Management, Compliance and Group Internal Audit) in compensation matters is well established.
Risk and Control Related Behaviour assessment of Group and business functions
The focus on risk and control related behaviours continues. The Control Functions annually perform an independent assessment of risk and control related behaviours and summarise the outcomes in a consolidated report.
Risk and Control Related Behaviour assessment of Key Risk Takers
Swiss Re bears risks in the course of its business activities, including market, credit and liquidity, underwriting, operational (including legal and compliance) and reputational risk. Swiss Re’s Key Risk Takers are executives in core risk-taking positions, who decide on business and people strategies, approve budgets, and can materially influence financial results or expose Swiss Re to significant operational or reputational risks.
In 2017, Swiss Re identified 180 positions that qualify as Key Risk Takers. This group consists of the members of the Group EC, BU EC members, other key executives and roles with core risk-taking authority. The list of Key Risk Takers is reviewed on a regular basis by Risk Management and Human Resources.
Influence of the behavioural assessment on compensation
The risk and control related behaviour assessment of Group and business functions provides additional input for helping determine the Group API pool and its allocation to each business function.
The Control Functions assess the risk and control related behaviour of each Key Risk Taker and deliver a report to key executives, including the Group Chief Risk Officer and the Chief Human Resource Officer on an annual basis. This assessment serves as an additional factor when considering individual performance and compensation outcomes.
Independence of the Control Functions
In order to ensure the continued independence of Control Functions, their compensation approval processes differ in that key annual compensation decisions for these functions are approved at the Board level.
This includes the approval of the aggregate API pools of the Control Functions, and the approval of the individual compensation for the head of each Control Function by the Board of Directors, including the Chairs of the Audit Committee and the Finance and Risk Committee.