Risk Committee – Terms of Reference

Membership
Members of the Risk Committee ("the Committee") shall be appointed by the Board, on the recommendation of the Nomination Committee and in consultation with the Chairman of the Committee. The Committee shall be made up of at least 3 members.

All members of the Committee shall be independent non-executive directors. The Chairman of the Board shall not be a member of the Committee.

Only members of the Committee have the right to attend Committee meetings. However, other individuals and external advisers may be invited to attend for all or part of any meeting, as and when appropriate.

The Society's Secretary shall attend all Board sub-committees in fulfilling his obligations as Secretary and assist the smooth running of the Board and its committees by setting agendas; preparing papers, presenting papers, as required; and advising the Board and its committees on Board procedures and compliance with the Annonated Combined Code.

Appointments of non-executive directors to the Committee shall be for a period of up to three years, which may be extended for two further three-year periods provided that the majority of the Committee members remain independent.

The Board shall appoint the Committee Chairman who should be an independent non-executive director. In the absence of the Committee Chairman and/or an appointed deputy, the remaining members present shall elect one of their number to chair the meeting.

Secretary
The Society’s Secretary or their nominee shall act as the Secretary of the Committee.

Quorum
The quorum necessary for the transaction of business shall be 2 members. A duly convened meeting of the Committee at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions vested in or exercisable by the Committee.

Frequency of Meetings
The Committee shall meet at least four times a year and at such other times as the Chairman of the Committee shall require.

Notice of Meetings
Meetings of the Committee shall be summoned by the Secretary of the Committee at the request of the Chairman of the Committee.

Unless otherwise agreed, notice of each meeting confirming the venue, time and date, together with an agenda of items to be discussed, shall be forwarded to each member of the Committee, any other person required to attend and all other non-executive directors, no later than 5 working days before the date of the meeting. Supporting papers shall be sent to Committee members and to other attendees as appropriate, at the same time.

Minutes of Meetings
The Secretary shall minute the proceedings and resolutions of all Committee meetings, including the names of those present and in attendance.

Minutes of Committee meetings shall be circulated promptly to all members of the Committee and the Chairman of the Board and, once agreed, to all other members of the Board, unless a conflict of interest exists.

Annual General Meeting
The Chairman of the Committee shall attend the Annual General Meeting prepared to respond to any member’s questions on the Committee’s activities.

Risk Management Duties
The Committee shall:

• Monitor the adequacy of the Society’s risk systems, make appropriate recommendations to the Executive;
• Review and report to the Board on the systems governing the identification and management of market, insurance, credit, liquidity and operational risks;
• Receive and review regular reports from the Executive and make appropriate recommendations to the Board;
• Review internal and external audit reports and comment/recommend on areas concerning risk functions;
• Review claims and underwriting audit reports and make appropriate recommendations to the Board;
• Approve treasury counterparties and counterparty limits;
• Consider the impact of breaches of any risk limits and ensure that the Executive takes appropriate action;
• Receive and review reports on legal and regulatory compliance and make appropriate recommendations to the Board;
• Keep abreast of both current risk techniques and theories and any possible or actual changes in the regulatory environment, recommending action accordingly;
• Evaluate the impact of changes on existing activities and the likely risk involved in new ventures;
• Monitor the performance of the investment strategies against benchmarks.

Reporting Responsibilities
The Committee Chairman shall report formally to the Board on its proceedings after each meeting on all matters within its duties and responsibilities.

The Committee shall make whatever recommendations to the Board it deems appropriate on any area within its remit where action or improvement is needed.

Other
The Committee shall, at least once a year, review its own performance, constitution and terms of reference to ensure it is operating at maximum effectiveness and recommend any changes it considers necessary to the Board for approval.

Authority
The Committee is authorised to seek any information it requires from any employee of the Society in order to perform its duties.

The Committee is authorised to obtain, at the Society’s expense, outside legal or other professional advice on any matters within its terms of reference, subject to the procedure being approved by the Board.