The insurer’s investment policy should outline its policy towards inherently risky financial instruments such as derivatives of various types, hybrid instruments that embed derivatives, private equity, alternative investment funds such as hedge funds, insurance linked instruments and commitments transacted through special purpose entities. Consideration of the associated counterparty credit risk should be included in the investment policy. It should also set out the policy for the safe-keeping of assets including custodial arrangements and the conditions under which investments may be pledged or lent.