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Allianz Annual Report 2012

Annual Report 2012    Allianz Group Business risk remained mostly stable in the course of 2012. SmallchangesspecificallyintheLife/Healthsegment,were mostly driven by changes in business volume. Operational risk Operational risks represent losses resulting from inade- quate or failed internal processes, from personnel and sys- tems, or from external events such as interruption of busi- nessoperationsduetoanelectricitybreakdownorflooding, damage caused by employee fraud or losses caused by court cases – as operational risks also include legal risk. For example, insurance companies are faced with the contin- ued trend towards consumer protection, especially in the realms of transparency, sales practices and suitability for life insurance products. Operational risk remained mostly stable in the course of 2012. Small changes were driven by refinements in expo- sure coverage. ­Allianz has developed a Group-wide operational risk man- agement framework that focuses on the early recognition and proactive management of operational risks. The frame­ work defines roles and responsibilities, risk processes and methods and has been implemented at our major operating entities. Local risk managers ensure this framework is im- plemented in their respective operating entities. The oper- ating entities identify and evaluate relevant operational risks and control weaknesses via a structured self-assess- ment. Furthermore, operational risk losses are collected in a central loss database. An analysis of the causes of signifi- cant losses is carried out to enable the operating entities to implement measures aimed at avoiding or reducing future losses. The measures adopted may include revising pro- cesses, improving failed or inappropriate controls, install- ing comprehensive security systems and strengthening emergency plans. This reporting is designed to provide comprehensive and timely information to senior manage- ment of the ­Allianz Group and the relevant local operating entities. Allocated internal operational risk capital by business segment (total portfolio before tax and non-controlling interests) as of 31 December 2012 [31 December 20111] C 103 Pre-diversified Group-diversified Total Group internal business risk capital: 3,026 [2,836] Share of total Group internal risk capital: 6.7 % [6.8 %] € mn  € mn 12/31/2011 12/31/2012 2,000 1,500 1,000 500 Property-Casualty 1,287 [1,223] Life/Health 914 [949] Corporate and Other 249 [114] Asset Management 576 [550] 539 450 44 550 566 414 576 138 +7.0 % 1,583 1,694  Property-Casualty   Life/Health    Asset Management    Corporate and Other  1 Recalculated based on model updates in 2012. C Group Management Report Risk Report and Financial Control 184 Risk Report 214 Controls and Procedures 207

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