Internal auditors need to remain vigilant following recent data showing that macro risks, such as economic growth and the state of monetary policy, weigh heavily on the minds of chief executives in the insurance sector.
“Despite some positive developments, the continuing low-yield environment and the observation that market fundamentals might not properly reflect the underlying credit risk, are still important concerns for the European insurance industry,“ says European Insurance and Occupational Pensions Authority’s (EIOPA) quarterly risk dashboard.
This risk dashboard is based on EIOPA’s analysis of Solvency II data and represents the main risks and vulnerabilities in the European Union insurance sector.
“Internal auditors will welcome the headline news that the risk environment remains constant,” Hervé Gloaguen, chairman of ECIIA’s Insurance Committee. “But the continuing low interest rate environment, political instability in some countries, and the impact of adverse weather events mean that auditors need to be on their guard.”
It is important that internal auditors are positioned within each company to provide objective assurance over key risks. That is best achieved through the three lines of defence model of corporate governance, he added.