Just Group plc | Annual Report and Accounts 2024
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GROUP RISK AND COMPLIANCE COMMITTEE REPORT continued
AREAS OF FOCUS Areas of focus during the year included the following matters.
Matters considered
How the Committee addressed the matter
RISK MANAGEMENT, CONTROLS AND CULTURE RISK MANAGEMENT AND CONTROLS FRAMEWORK
The Committee reviewed and approved the risk management plan for the year and ensured that the risk framework continued to be developed in line with the business needs. It also received an update on the implementation of a revised Enterprise Risk Management Framework and enhancements to the Company Risk Policy Framework during the year. The Committee noted findings from a review carried out by Group Internal Audit on the effectiveness of financial and non-financial reporting controls, which had been considered by the Group Audit Committee. There was a discussion on the advisory and oversight engagement by the Risk function and the Committee was supportive of the actions that the Risk team have undertaken to ensure ongoing effective oversight of financial and non-financial reporting controls. During the year, the Committee and the Group Audit Committee held a joint educational session on the requirements introduced in the 2024 iteration of the UK Corporate Governance Code on the effectiveness of risk management and internal controls, which apply from 1 January 2026. The Directors considered the strong foundations in place and the areas that need to evolve to ensure compliance with the new requirements. This will continue to be a focus area for the Committee in the year ahead. During the year, the Committee received updates on risk culture including management information on the key risk indicators and observations from the Risk function, which facilitated a constructive discussion on positive developments and areas requiring more focus by the business. Metrics and key performance indicators have been further developed to monitor the delivery of good customer outcomes under the Consumer Duty regulation. The Committee received updates on risk events and breaches, and considered the controls assurance processes in place to investigate risk events during the year. The Committee was satisfied that, overall, there is a healthy risk culture of reporting risk events and breaches, and that processes are in place to address any weaknesses identified as part of ongoing monitoring and oversight. The Own Risk and Solvency Assessment (“ORSA") is the on-going process of identifying, measuring, managing, monitoring and reporting the risks to which the Group is exposed and to assess the capital adequacy of the Group and its life companies. The Committee considered, and recommended to the Group Board for approval, the annual ORSA report during the year, which provided a risk review of the Group together with a forward-looking assessment of the main risks it faces. The Committee considered the Group’s readiness to operate effectively in an uncertain environment, the sustainability of the Group’s business model and Just’s ability to recover from various stress events. It considered and agreed recommendations from the Risk function to enhance the ability of the Group to address and withstand the forward-looking risks identified. These are being monitored by the Committee to ensure effective action implementation. The Committee also received regular updates on the Group’s evolving risk profile for review and discussion throughout the year. This included a review of model risk management. Additionally, various risk appetite tolerances and key risk indicators were revisited to ensure that the measurement and oversight of risk was appropriate and reflected the growth ambitions of Just. Further details of the Group’s principal risks can be found on pages 66 to 69. As part of the oversight of Just’s financial risk management framework, the Committee engaged on stress testing scenarios and the outcomes of tests undertaken during the year. The Committee provided input into the suitability and severity of a multi-metric scenario narrative and the choice of risk drivers and management actions. The outcome of the multi-metric test was subsequently considered by the Committee. There was also a review of the Group’s Recovery Plan and potential risks. During this review, the Committee considered whether the Group had credible and realistic options to effect recovery in the event of a range of possible shocks, both short term and medium term, and the impact on capital and liquidity needs of the business. After consideration, the Committee recommended, and the Board subsequently approved, the Recovery Plan. The effectiveness of Just’s stress and scenario testing framework and how its scenario analysis feeds into the overarching financial risk appetite will continue to be a key focus for the Committee in 2025. The Committee considered the continued appropriateness of the Solvency II capital, IFRS earnings, liquidity, operational and conduct risk appetites and limits as part of the business plan and strategy risk review. The Committee concluded that no material changes were required. The Committee also reviewed the reinsurance risk appetite and thresholds set for funded reinsurance. After taking into consideration Just’s reinsurance strategy and financial position, as well as regulatory expectations, the Committee recommended changes which were approved by the Board. During the year, the Committee considered changes to Just’s risk exposure as a result of its new business profile and investment strategy. The Committee recommended that the Board adjust its risk taxonomy and associated risk appetites to continue to manage the risks effectively. The proposal was subsequently approved by the Board. The Nested Meetings considered proposed changes to the investment risk framework and investment limits during the year. One focus area was the development of enhanced credit risk metrics to support portfolio management and facilitate effective oversight of the Group’s credit risk exposure. Enhanced credit risk metrics are now included in the Quarterly Risk Reports for review by the Committee. These metrics will continue to be developed with input from the Committee to ensure credit risk remains effectively managed. There were discussions on the resources, skills and capability requirements of the Investment, Risk and supporting functions to support Just’s growth ambitions. This led to further engagement at Board meetings on the strategic workforce plans to ensure the needs of the business are met as it grows. There was also a discussion on regulatory changes to the matching adjustment requirements during the year. During a Nested Meeting, the Committee considered and recommended the adoption of a new Matching Adjustment Attestation Policy, which was subsequently approved by the JRL and PLACL Boards.
RISK CULTURE
OWN RISK AND SOLVENCY ASSESSMENT
FINANCIAL RESILIENCE
RISK APPETITES
INVESTMENT RISK OVERSIGHT
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