RADIAN GROUP INC

As a financial services organization, risk management is a critical part of our business. The following goals guide our strategy and actions as a risk management organization:

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Embed and continually reinforce a disciplined, corporate-wide risk culture that utilizes an understanding of risk/return trade-offs to drive quality decisions and achieve long-term, through-the-cycle profitability;

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Maintain credit, underwriting, pricing, and risk/return disciplines based on sound data and analytics and continuous feedback throughout the organization;

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Proactively monitor business, counterparty, economic, housing and compliance-related trends to identify and mitigate emerging risks;

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Continually refine analytical and technological capabilities, processes and systems to effectively identify, assess and manage risks; and

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Develop and leverage tools and capabilities to inform and optimize capital allocation within our risk appetite in support of our corporate strategy.

Our risk appetite, or the amount of risk we are willing to take on in pursuit of value, is driven by our business strategy, which is established by executive management and overseen by our board of directors. We define our risk appetite qualitatively through the following key risk categories where strategic execution occurs: credit; financial; strategic; operational and regulatory and compliance. We do not treat reputational risk as a distinct category of risk; rather, we view reputational risk as pervasive throughout our entire risk portfolio, as each risk on its own can impact our reputation if not mitigated or managed properly.

We have adopted an integrated approach to risk management, which includes, among other things: (i) a centralized ERM function that is responsible for overseeing the process for risk identification, assessment, management, and mitigation across the organization; (ii) an enterprise compliance function for overseeing regulatory compliance matters, policy governance and related risks; (iii) risk management functions embedded in our businesses; (iv) specialized risk committees with a focus on specific risks; and (v) an internal audit function that performs periodic, independent reviews and tests compliance with risk management policies, procedures and standards across the Company.

Our ERM framework is designed to provide executive management with the ability to identify and evaluate the most significant risks we face and to calibrate risk mitigation strategies to account for challenges in the current business environment, as well as external factors that may negatively impact our operations. In practice, our ERM function represents a cross-functional and enterprise-wide effort, consisting of subject matter experts and experienced managers, which utilizes a systematic method to identify, evaluate, and monitor both known and emerging risks. Risk assessments and mitigation plans are developed to address these risks. Risk scoring and validation of the effectiveness of risk management plans through management reporting facilitate program sustainability and promote accountability for risk management activities throughout the Company.

As part of our ERM program, our businesses employ comprehensive risk management functions, which, in conjunction with oversight by the Risk Committee of our board of directors, are responsible for monitoring compliance with our risk-related policies, managing our insured portfolios and the mortgage loans we purchase through our mortgage conduit, and communicating credit-related issues to management, our board of directors and our customers.

Our senior executive management team regularly monitors and discusses risks related to our businesses through various management committees. Our Pricing and Risk Committee, Capital and Liquidity Committee and Model Governance

Committee (these committees collectively comprise our Asset Liability Committee) focus on identifying risks and decision making related to pricing, credit, capital, liquidity and model risk management, including risk/return analysis associated with different business opportunities. Other management committees focused on risk management include, but are not limited to, our ERM Executive Steering Committee and ERM Council, Executive Information Security Committee, Enterprise Compliance Oversight Council and Resilience Executive Committee.

Information security is a significant operational risk for financial institutions such as Radian. To address this, our ERM program incorporates cybersecurity-related risks into our identification, evaluation and mitigation processes. In addition, we maintain an Information Security Program that is designed to protect our corporate data, including data we provide to others, as well as data entrusted to us by our customers and partners. For more information about our Information Security Program and other aspects of our cybersecurity governance and risk management, see “Item 1C. Cybersecurity.”

Board of Directors

Our board of directors is actively involved in the oversight of material risks relating to our Company. In this regard, our board of directors seeks to understand and oversee how senior management addresses the most critical risks relating to our business and to ensure there is an effective governance process in place for reviewing the systems and processes that management has developed to manage and mitigate material risks, including those that could arise in the future. The board has formed a standing committee, the Risk Committee, for the primary purpose of overseeing the Company’s management of material risks. In carrying out this responsibility, the Risk Committee’s primary role is coordination, working with the full board and other committees to ensure the effective oversight over material risks. In conducting its risk oversight responsibilities, the Risk Committee oversees the Company’s ERM function, including by:

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reviewing the methodologies, policies, processes, resources and reporting structures established by management to identify, assess, monitor and ensure appropriate mitigation of material risks;

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reviewing and approving the Company’s enterprise risk appetite statements and management’s procedures for ensuring the Company is operating in a manner consistent with such statements;

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receiving reports regarding management’s compliance with regulatory requirements related to ERM, including any related filings or disclosures; and

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regularly reviewing and analyzing management’s assessment of material risks, including any significant changes or developments with respect to existing risks or the emergence of new risks or risk trends.

The Risk Committee utilizes the information derived from its oversight over ERM to coordinate oversight responsibilities over material risks among the full board and its standing committees as follows.

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The Audit Committee oversees material risks that could impact the Company’s financial statements and internal controls over financial reporting such as the risk of fraud or illegal acts, and oversees risks pertaining to our enterprise compliance program and the Company’s Code of Conduct and Ethics.

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The Compensation and Human Capital Management Committee oversees material risks pertaining to the Company’s compensation and human capital management policies and practices. In conducting this oversight, this committee reviews and discusses with management an annual risk assessment of the Company’s compensation policies and practices prepared by the Company’s independent compensation consultant.

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The Finance and Investment Committee oversees material risks pertaining to the Company’s investment portfolio, the Company’s liquidity position, capital structure and credit and financial strength ratings.

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The Governance Committee oversees material risks pertaining to the Company’s corporate governance structure and practices, including by overseeing the Company’s policy regarding related person transactions to ensure that the Company does not engage in transactions that would create or give the impression of a conflict of interest or that could cause harm to the Company and the Company’s interactions and engagement with stockholders.

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In addition to its oversight over ERM and its role in coordinating risk oversight among the full board and its committees, the Risk Committee directly oversees material risks related to: the Company’s risk-taking businesses, comprising our mortgage insurance, mortgage conduit and title insurance businesses; our information security function, including the management of risks related to data security, cybersecurity and privacy; our policies and procedures for monitoring and managing counterparty risk; our enterprise insurance program for managing business risks; and our program for maintaining business continuity and resilience.

Each committee chair provides regular reports to the full board regarding their committee’s risk oversight responsibilities as discussed above. The full board conducts its risk oversight responsibility in the areas discussed above through its review and evaluation of these reports, as well as through regular discussions and reports from management regarding other material risks not otherwise allocated to the committees. Finally, the full board further considers current and potential future strategic risks facing the Company as part of its annual strategic planning session with management.

Mortgage Insurance Risk Management

Risk Origination and Servicing. We believe that understanding our business partners and customers is a key component of managing risk. Accordingly, we have a counterparty risk management team that leverages our customer and servicer segmentation framework so that we can more effectively perform ongoing monitoring of loan performance, underwriting quality and the risk profile and mix of business of a customer’s mortgage insurance applications. The counterparty risk management team monitors trends at the customer level, identifies customers who may exceed certain risk tolerances and shares meaningful performance data with our customers to help them improve. The team is also responsible for taking lender corrective action in the event we discover credit performance issues, such as high early payment default levels.

Portfolio Management. We have developed risk and capital allocation models to support our Mortgage Insurance business. These models provide comprehensive analytics that help us establish portfolio limits for product type, loan attributes, geographic concentrations and counterparties. We proactively monitor market concentrations across these and other attributes. We also identify, evaluate and negotiate potential transactions for terminating insurance risk and for distributing risk to third parties, including through reinsurance arrangements. As part of our portfolio management function, we monitor and analyze the performance of various risks in our mortgage insurance portfolio. We use this information to develop our mortgage credit risk and counterparty risk policies, and as a component of our default and prepayment analytics.

Credit Policy. We maintain mortgage-related credit risk policies that reflect our tolerance levels regarding counterparty, portfolio and operational risks. Based on our policies and risk tolerances, our credit policy function develops and updates our mortgage insurance eligibility requirements and guidelines through regular monitoring of competitor offerings, GSE programs and GSE guideline updates, customer input regarding lending needs, analysis of historical performance and portfolio trends, quality assurance results and underwriter experience and observations. The credit policy function works closely with our mortgage insurance underwriters to ensure that underwriting decisions align with risk tolerances and policies.

Quality Assurance. Our quality assurance function audits individual loan files to examine underwriting decisions for compliance with agreed-upon underwriting guidelines. These audits are conducted across loans submitted through our delegated and non-delegated underwriting channels in order to monitor underwriting quality for insurance certificates underwritten by our customers or our underwriters. We conduct independent re-verification of key mortgage insurance application data to minimize the possibility of misrepresentation. Our quality assurance team also conducts audits of our key operational functions, including claims, premium processing and customer care to ensure that our operational transactions are in compliance with our policies and procedures.

Loss Mitigation. We have a dedicated loss mitigation group that works with servicers to identify and pursue loss mitigation opportunities for loans in both our performing and non-performing portfolios. This includes regular surveillance and benchmarking of servicer performance with respect to default and loss mitigation workout reporting, borrower home retention efforts, foreclosure alternatives and foreclosure proceedings. Through our risk management function, we seek to hold servicers accountable for their performance and communicate to servicers identified best practices for servicer performance. See “Mortgage Insurance—Defaults and Claims—Claims Management” for more information.

Quantitative Analytics. Our quantitative analytics team uses various mathematical modeling methodologies, including artificial intelligence and machine learning, to assist our decision-making in key areas such as underwriting, pricing, claims, reserving, portfolio analysis, economic forecasting and risk distribution.

Risk Distribution. In our Mortgage Insurance business, we use reinsurance as a capital and risk management tool, including to lower the risk profile and financial volatility of our mortgage insurance portfolio through economic cycles. We have distributed risk through third-party quota share and excess-of-loss reinsurance arrangements, including through the capital markets using mortgage insurance-linked notes transactions. The objectives of our risk distribution strategy include: (i)

supporting our overall capital plan by reducing our cost of capital, increasing capital efficiency and enhancing our projected returns on capital and (ii) reducing portfolio risk and financial volatility through economic cycles. For additional information regarding our reinsurance programs, see Note 8 of Notes to Consolidated Financial Statements.

All Other Risk Management

Our focus on enterprise risk management extends to our other risk-taking operations as well, most notably our Title and Mortgage Conduit businesses.

In our Title business, we assess and manage risk through the use of trained underwriters, underwriting guidelines and the imposition of per file risk limits and, over certain policy limits, third-party reinsurance on a per policy basis. In addition, we have a dedicated Title Insurance Claims and Underwriting Committee that meets regularly to review individual open claims and adjust Radian Title Insurance’s case reserves as needed.

In our Mortgage Conduit business, we conduct frequent reviews of our conduit loan programs, underwriting guideline changes and mortgage seller underwriting programs. We also maintain mortgage seller approval and recertification policies to evaluate and monitor, among other things, seller creditworthiness, capacity and quality. Our quality assurance function audits a sample of individual purchased loan files, and we conduct independent re-verification of key credit file data to protect against misrepresentation. In addition, Radian Mortgage Capital’s purchases and sales of mortgage loan products are governed by an established framework, which includes, among other controls, authority levels, escalation triggers and governance over target pricing, hedging, risk position limits and trade size limits.