6.4 Risk appetite, risk profile and risk tolerance

Reflection of the PZU Group’s strategic plans in its risk appetite, profile and tolerance ensures appropriateness and efficiency of the risk management system and prevents risk acceptance at a level which could pose a threat to the financial stability of the PZU Group companies.

The risk management strategy revised in 2013 defines the thresholds for the risk appetite, profile as well as risk tolerance limits, which result in active and conscious changes in the amount of risk assumed.

The risk appetite has been defined as the risk that the PZU Group is prepared to accept in pursuit of its business goals. The risk appetite level has been defined as the minimum level of the capital requirement coverage ratio.

The risk profile denotes quantitative limits which define in detail the risk appetite of the PZU Group companies.

Tolerance limits are additional limits introduced for individual risk types to mitigate the potential risk.