2007 Annual Meeting ● Assemblée annuelle 2007

Vancouver

2007 Annual Meeting ● Assemblée annuelle 2007

Vancouver

Canadian Institute

of Actuaries

Canadian Institute

of Actuaries

L’Institut canadien desactuaires

L’Institut canadien desactuaires

Enterprise Risk Management 101

Company Perspective

Altaf Rahim

AEGON Canada

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Agenda

• Brief Overview of AEGON Canada

• Purpose of ERM

• Implementation of ERM

• Final Thoughts2007

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AEGON Canada• AEGON Canada consists of:

– Transamerica Life Canada• Offers life insurance and savings products

– AEGON Capital Management• Offers active asset management to Canada’s top pension

funds, foundations and institutional investors– AEGON Fund Management

• Offers mutual funds – Money Concepts Limited

• Canada’s largest franchised financial planning company– AEGON Dealer Services

• Mutual fund dealership

• Member of the AEGON Group, one of the worlds largest insurance and pension companies

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Risk Management

• AEGON has a decentralized approach

• Group Risk is responsible for risk management oversight at the Group level

• AEGON Canada works closely with Group Risk and AEGON USA Corporate Risk

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ERM Purpose• Described in the Company’s Board approved

Enterprise Risk Management Policy

• ERM is the ongoing process of developing, implementing and monitoring financial and operational risk strategies

• ERM provides the framework in which all risk management activities within AEGON Canada are coordinated.20

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Implementation of ERM

• Risk Management Mandate • ERM Framework Objectives• ERM Framework• Policies• Risk Reporting

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Risk Management Mandate• Risk Management contributes to the achievement

of AEGON Canada’s risk management and governance objectives

• Risk Management function acts independently to identify and assess financial and operational risks facing the Company

• Reports on risk management matters to Company Management and the Audit Committee of the Board

• Chief Risk Officer has periodic “in camera” sessions with the CEO and the Audit Committee of the Board

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ERM Framework Objectives• ERM framework provides a clear reporting structure

for all financial and operational risks

• Allows the Risk and Capital Committee to review risks based on the information provided through other organizational committees and working groups

• Limits the inherent risk of working in silos

• Allows for the early detection of potential issues that may impact the Company

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ERM Framework20

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Risk & Capital Committee

(RCC)

Risk Management

Asset Liability Management

Capital Management

Operational Risk Mgmt

Economic Capital

Portfolio Mgmt Team (PMT)

PolicyGovernance

Group Risk Reporting

ORMIT Risk

Management

Crisis Management

Information SecuritySupport Council

AEGON International Security COI

US Divisional Security Officer

Council

LiquidityManagement

Interest RateManagement

Credit Risk

PortfolioConcentration

ComplianceRisk Mgmt

Shock Testing

Capital Forecast

Product Development

Steering Committee

LegislativeCompliance

Mgmt System (LCMS)

AEGON NV Risk Report

Conflict of Interest Questionnaire

Complaints

Money Laundering

Report

MarketConduct

ALM

Key Initiative Steering Committee

Risk and Capital Committee• Comprised of Senior Management of the Company

• Responsible for overseeing the planning, directing, and controlling of the impact on the Company of risks arising from its operations

• Identification of material risks

• Direct the implementation of financial and operational risk strategies

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Risk and Capital Committee• Development of risk measurement metrics

• Establishment of policies and operating guidelines for the management of risk

• Monitoring and measurement of compliance to risk management policies

• Reporting of results of risk monitoring to the Board2007

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Policies within ERM Framework20

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Enterprise Risk Mgmt

RiskManagement

Asset Liability Management

Capital Management

Operational Risk Mgmt

EnterpriseRisk Mgmt Policy

Product Design &Pricing Mgmt

Risk Mgmt Policy

ORMIT Risk

Management

Crisis Management

Enterprise InformationSecurity Standards

Staff SecurityHandbook

EquityRisk Mgmt policy

Foreign ExchangeRisk Mgmt Policy

Interest RateRisk Mgmt Policy

Asset LiabilityRisk Mgmt Policy

ComplianceRisk Mgmt

LiquidityRisk Mgmt Policy

CapitalRisk Mgmt Policy

Anti Money Laundering

Risk Mgmt Policy

OutsourcingRisk Mgmt Policy

PrivacyRisk Mgmt policy

Asset LiabilityOperating Guideline

Investment & LendingRisk Mgmt Policy

Underwriting & ClaimRisk Mgmt Policy

Signing AuthoritiesRisk Mgmt Policy

Risk ManagementMandate

EmployeeCode of Conduct

Reinsurance Risk Mgmt Policy

Annual Business Continuity

Policy

Credit nameLimit Policy

Equity RiskPricing Policy

Derivative UsePolicy

Conflict of InterestQuestionnaire

Risk Reporting• Stress tests help identify sensitivity to various risks

(e.g. equity, interest, mortality)

• Credit name limit reporting measures the Company’s economic exposure to credit risk

• Liquidity risk reporting allows Management to identify any liquidity issues over a specified time horizon under various stress scenarios

• Operational risk reporting reveals any potential losses due to operational risk based events

• Compliance to Board approved policies

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Final Thoughts• Enterprise risk management has to be important for

Senior Management

• Risk management needs to be embedded in the culture of the company

• Risk management should be viewed as a business partner

• Pro active identification of material risks

• Need to develop strategies to mitigate risks based on Company’s tolerance

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