INSURANCE AUDIT PROGRAMME Risk Management Objective The purpose of risk management is to reduce the group's exposure to financial

liability as the result of accidental losses or other events causing potential or actual liabilities. Insurance is a subset of risk management, and used as a tool to manage specific risks. Audit Objectives To assess the effectiveness of the risk management process To determine whether the insurance coverage is cost-effective To ensure that the procedures for reporting incidents and making claims are adequate and appropriate Scope A Review of the risks identified in divisional strategic planning B Review of risk management in the group C Review of insurance policies and contracts D Review of insurance costs and premiums E Review of incidents and claims procedures A. Risks Identified in Divisional Strategic Planning Audit objectives: to ensure that all risks and their corresponding impact have been properly identified, and that action plans have been appropriately formulated. Examine the process management undertakes to identify and assess risks Review the risks identified by divisions and determine whether all risks have been identified Review the operational and financial impact of each risk and determine whether action plans to manage risks are appropriate B. Risk Management Audit objectives: to review the risk management process and procedures to ensure that risks are properly identified and assessed, and action plans correctly formulated. Risks generally fall into the following broad categories: 1 Property risks 2 Liability risks 3 Employee risks 4 Operational risks

C. Review of Insurance Policies and Contracts Audit objective: to ensure that insurance policies are cost effective in terms of adequately covering the groups exposure to specifically identified risks. 1) Information required Obtain the schedule of insurance that summarizes all policies. The schedule should contain the following information: - Policy period/Insurers - Nature of coverage, type, and description - Premiums to be paid - Amount of coverage and applicable limits 3) Review of insured risks Audit objective: to ensure that the group has adequate insurance cover over significant risks. Review the schedule of insured risks to ensure that all divisions are adequately covering all risks on a cost-effective basis. This can be achieved by comparing insurance coverage from prior years as well as reviewing loss/claim histories. 4) Annual declarations for premium renewal and adjustment purposes Audit objective: to ensure that the relevant insurance company is advised of any material changes in business activities or insurable items during the year that will affect insurance coverage. Obtain memos and schedules that have been supplied to insurance companies on renewal of policies. Specific policies require annual declarations for premium renewal. Review all declarations made when the contracts of insurance are renewed and during the course of the year. E. Review of Incidents and Claims Procedures Audit objective: to ensure that all incidents are reported properly, and that claims procedures are being followed correctly. Review the procedures over the reporting of incidents and the procedures for making claims.