060 Chap. 2 GROUP MANAGEMENT REPORT RISK REPORT Credit risks Credit risks are risks involved in the possible losses attributable to a durable deterioration of the credit standing or of the total or partial default of an issuer or contracting party. Default risks in primary insurance business exist mainly with regard to the amounts receivable from policyholders, insurance intermediaries and reinsurers. The default risks under loans to end customers (such as loans in building- society business) are also included in credit risks. Specific segment risks (underwriting risks) Life and health sub-segments The specific segment risk of life and health insur- ance is composed of the biometric risk, the cost risk and the lapse risk. The risks are involved in the fact that the possible occurrence of claims and the future cost or lapse situation may differ from the assumptions on which the premium calculation was based. Property and casualty segment The specific segment risk of property and casu- alty insurance consists of the pricing risk and the reserving risk. The premiums determined in advance have to be sufficient so that future claims can be paid. Due to the fact that prognoses with regard to future claims are only possible to a limited extent, the extent of claims payments is not yet known with cer- tainty when premium levels are fixed (pricing risk). The reserving risk may be involved in an insufficient level of provisions for outstanding claims with the ensuing impact on the underwriting result. Liquidity risk The liquidity risk is the risk involved in not being able to fulfil current and future payment obligations, especially under insurance contracts, in time or for the full amount. Other risks Other risks occur, for instance, in the context of all operational systems and processes and may be caused by human or technical failure and by external factors of influence. The other risks comprise opera- tional, strategic and litigation risks as well as general business risks. Details regarding these risks, in particular the approaches and methods for controlling these risks and the appropriate sensitivity analyses, are disclosed in compliance with the rules of IFRS 4 (Insurance Con- tracts) and IFRS 7 (Financial Instruments: Disclosures) in the Notes, section 5, p. 104 ff. Risk analysis and assessment After their classification by specific risk cat- egories, all identified risks are allocated to adequate risk-management processes within the scope of the risk-management system of the AMB Generali Group. These processes take into account the different risk features. This ensures an appropriate analysis, assess- ment and monitoring of risks. The allocation of the risks to the four standard- ized risk-management processes or management rou- tines is oriented at three major criteria: 1. quantifiability of the risk; 2. time horizon in which the risk may potentially contribute to jeopardizing the existence; 3. materiality of the risk. Quantity-based management process If the identified risk is quantifiable and may threaten the company's existence in the short term within one year (materiality), it is allocated to the quan- tity-based management process. The necessary risk quantification is done on the basis of a standardized Group risk model and comprises all investment, credit and specific segment risks. In addition, these risks are subject to continuous monitoring by the persons Risk-management process Analysis/assessment Communication Controlling Identification Monitoring/ documentation