earnings and capital position. These plans also cover extreme event scenarios, such as the possibility of pandemics in one or more of the company’s main markets. 

During 2010, AEGON took a series of measures to limit the company’s exposure to major financial risks (see page 45). 

## AEGON’s risk governance framework 

AEGON has a strong culture of risk management, based on a clear, well-defined governance framework. The goals of this framework are as follows: 

■ To minimize ambiguity by clearly defi ning responsibilities and reporting procedures for decision makers. 

■ To institute a proper system of checks and balances by ensuring that senior management is aware at all times of material risk exposure. 

■ To manage concentration of risk by avoiding the threat of insolvency from an over-concentration of risk in particular areas. 

■ To facilitate diversification by enabling management to identify diversifi cation benefits from apparent risk-return trade-offs. 

■ To reassure external constituencies that AEGON has appropriate risk management structures and controls in place. 

## Governance structure 

AEGON’s risk management framework is represented across all levels of the organization. This ensures a coherent and integrated approach to risk management throughout the company. Similarly, AEGON has a number of company-wide risk policies in place, which detail specific operating guidelines and limits. These policies are designed to keep overall risk-specific exposures to a manageable level. Any breach of policy limits or warning levels triggers immediate remedial action or heightened monitoring. Further risk policies may be developed at a local level to cover situations specific to particular regions or operating units. AEGON’s risk management governance structure has three basic layers: 

■ The Supervisory Board (and the Supervisory Board Risk Committee). 

■ The Executive Board (and the Executive Board Risk Committee). 

■ Risk and Capital Committees (RCCs) present at group level, regional level and in AEGON’s operating units. 

AEGON’s Executive Board has overall responsibility for risk management. The Board adopts the risk governance framework and determines the company’s overall risk tolerance and company-wide risk policies. 

In 2010, AEGON established the Executive Board Risk Committee with responsibility for ensuring proper execution of the risk governance framework, as well as monitoring compliance with the risk tolerance and company-wide risk policies. The Executive Board Risk Committee has three members: the Chief Executive Officer, the Chief Financial Officer and the Chief Risk Officer. This Committee reports regularly significant risks to and discusses risk strategy with the Risk Committee of the Supervisory Board, which is responsible for overseeing AEGON’s enterprise risk management, including risk governance and measures taken to ensure risk management is integrated properly into the company’s broader strategy. The Risk Committee of the Supervisory Board also supervises overall risk exposure in light of management’s risk tolerance, the company- wide risk policies and AEGON’s overall solvency position. This Committee reports to the full Supervisory Board on a quarterly basis or more frequently, if required. Details of members of the Supervisory Board’s Risk Committee can be found on page 63 of this Annual Report. It is the responsibility of the Executive Board to inform the Supervisory Board should any risks directly threaten the solvency, liquidity or operations of the company. 

The Chief Risk Officer also has an individual responsibility in this regard and has direct access to the Chairman of the Supervisory Board Risk Committee. 

## Risk and Capital Committees 

The Executive Board Risk Committee (EBRC) also supervises the work of AEGON’s Group Risk & Capital 

