Ability to rank risk

1. For the purposes of the second subparagraph of Article 121(4) of Directive 2009/138/EC, the internal model shall be able to rank all material risks covered by the internal model.

2. The ability to rank risks shall be consistent with the classification of risks used in the internal model and the classification of risks used in the risk management system.

3. Similar risks shall be ranked consistently throughout the insurance or reinsurance undertaking and ranked consistently over time.

4. The ranking of risks shall be consistent with the capital allocation referred to in point (b) of the first paragraph of Article 120 of Directive 2009/138/EC.