CAPITAL MANAGEMENT RISK
Refer to the capital management note for further details.
V. Operational risk
Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.
Operational risk can impact other risk categories. When controls fail, an operational risk incident can cause injury, damage to
reputation, have legal or regulatory implications or can lead to financial loss. The Group does not aim to eliminate all operational risks,
but manages these by initiating an appropriate control framework and by monitoring and managing potential risks.
IAG's Operational Risk Management Framework, inclusive of the Group Operational Risk Policy, operates within IAG’s Enterprise Risk
Framework. IAG’s Operational Risk Management Framework articulates IAG’s key Operational Risk Management elements under its
Risk Framework and the operational risk management requirements of the Group. It aims to ensure that consistent governance
mechanisms are in-place and that activities undertaken which involve Operational Risk are assessed and managed with appropriate
regard to the Group’s Risk Appetite Statement and the achievement of IAG’s objectives. The Board and Executive team believe an
effective, documented and structured approach to operational risk is a key part of the broader risk management framework.
The Board has ultimate responsibility for risk management, including operational risk. The Board is responsible for oversight of the
Operational Risk Framework and approval of the Operational Risk Management Policy, and any changes to it.
As outlined in IAG's RMS and in the Group Operational Risk Framework, Group Policy and the supporting Operational Risk Procedures,
operational risk is to be identified and assessed on an ongoing basis. The Internal Capital Adequacy Assessment Process (ICAAP)
includes consideration of operational risk. Management and staff are responsible for identifying, assessing and managing operational
risks in accordance with their roles and responsibilities. The Group's Internal Audit function reviews the effectiveness of processes and
procedures surrounding operational risk.
The general insurance operations of the Group are subject to regulatory supervision in the jurisdictions in which they operate.
Regulatory frameworks continue to evolve in a number of jurisdictions. The Group works closely with regulators and monitors
regulatory developments across its international operations to assess potential impacts on its ongoing ability to meet the various
regulatory requirements.
Throughout the current reporting year the Group has conformed with the requirements of its debt agreements, including all financial
and non-financial covenants (2014-full conformance).
NOTE 4. ANALYSIS OF INCOME
CONSOLIDATED
2015
2014
$m
$m
A. GENERAL INSURANCE REVENUE
Gross written premium
11,440
9,779
Movement in unearned premium liability
85
(58)
Premium revenue
11,525
9,721
Reinsurance and other recoveries revenue
2,422
1,857
Reinsurance commission revenue
52
51
Total general insurance revenue
13,999
11,629
B. INVESTMENT INCOME
Dividend revenue
39
38
Interest revenue
517
511
Trust revenue
19
16
Total investment revenue
575
565
Net change in fair value of investments
Realised net gains and (losses)
227
(2)
Unrealised net gains and (losses)
14
296
Total investment income
816
859
Represented by
Investment income on assets backing insurance liabilities
585
459
Investment income on shareholders’ funds
231
400
816
859
C. FEE AND OTHER INCOME
Fee based revenue
132
125
Other income
55
74
Total fee and other income
187
199
D. SHARE OF NET PROFIT/(LOSS) OF ASSOCIATES
6
(8)
Total income
15,008
12,679
62 IAG ANNUAL REPORT 2015
