French Insurance Code
In forceI.-The risk management system referred to in Article L. 354-2 comprises the strategies, processes and information procedures needed to identify, measure, monitor, manage and report, on an ongoing basis, the risks, at individual and aggregate levels, to which undertakings are or could be exposed, as well as the interdependencies between these risks.
This system shall be integrated into the organisational structure and decision-making procedures of the undertaking and duly taken into account by the persons who effectively run the undertaking or who are responsible for the key functions referred to in Article L. 354-1.
It covers the risks to be taken into account in calculating the Solvency Capital Requirement in accordance with Article R. 352-2 , as well as risks which are not, or not fully, included in this calculation.
It covers, as a minimum, underwriting and provisioning, asset-liability management, investments, in particular in financial futures, liquidity and concentration risk management, operational risk management as well as reinsurance and other risk mitigation techniques. These areas are also specified in the written policies referred to in Article L. 354-1.
II - When insurance or reinsurance undertakings apply the equalisation adjustment referred to in Article R. 351-4 or the volatility adjustment referred to in Article R. 351-6, they draw up a liquidity plan including a forecast of incoming and outgoing cash flows with respect to the assets and liabilities subject to these adjustments and corrections.
