(1) An insurance undertaking or reinsurance undertaking shall establish and maintain an effective risk management system comprising strategies, processes and reporting procedures necessary to identify, measure, monitor, manage and report, on a continuous basis, the risks, on an individual and aggregated level, to which the undertaking is or could be exposed, and any interdependencies.

(2) The risk management system shall be effective and well integrated into the organisational structure and decision-making processes of the undertaking with proper consideration of the persons who effectively run the undertaking or have other key functions.

(3) The risk management system shall cover the risks that are included in the calculation of the Solvency Capital Requirement as set out in Regulation 114(6) and (7) as well as the risks which are not, or are not fully, included in the calculation of it.

(4) The risk management system shall cover at least the following areas:

(a) underwriting and reserving;

(b) asset-liability management;

(c) investment, in particular derivatives and similar commitments;

(d) liquidity and concentration risk management;

(e) operational risk management;