87 As part of the company’s ERM Framework, Aegon carries out  regular sensitivity analyses to verify that the impact of different  economic and business scenarios on earnings and the capital  position are within the risk tolerances set. These analyses  also cover extreme event scenarios, such as depression and  inflation scenarios. Credit spreads remained stable in 2013. During the year, Aegon  continued to reduce its exposure to credit risk. The Dutch  operations agreed with the Dutch Central Bank to change the  Solvency I valuation curve from ECB AAA to swap. As a result of  this decision and of managing the sovereign spread risk under  Solvency I, investments in German and French government bonds  were exchanged for investment in Dutch government bonds.  Moreover, new business and maturing bond cash flows in the  United Kingdom were invested in high-rated sovereign-linked  paper. In the general account investment portfolio, Aegon  retained minimum exposure to peripheral European countries. Aegon has put in place a strong liquidity management strategy.  Aegon considers extreme liquidity stress scenarios, including the  possibility of prolonged ‘frozen’ capital markets, an immediate  and permanent rise in interest rates, and policyholders  withdrawing liabilities at the earliest conceivable date.  In addition, the company has liquidity stress planning in place.  In 2013, Aegon retained significant holdings of cash and highly  liquid assets as a precaution against potential adverse market  developments. Stress tests show that available liquidity would  more than match the company’s liquidity requirements, even if  market conditions were to significantly deteriorate. Aegon’s earnings depend, to a significant degree, on the extent  to which claims experience is consistent with assumptions used  to price products and establish technical liabilities. Changes in,  among other things, morbidity, mortality, longevity trends and  policyholder behavior may have a considerable impact on Aegon’s  income. While Aegon believes it has the capacity to take on  more underwriting risk to capitalize on growth opportunities  in its main life insurance and pension markets, the company  has also reduced exposure to longevity risk via a longevity  swap transaction. Like other companies, Aegon faces risks resulting from  operational failures or external events, such as changes in  regulations, acts from personnel and natural or man-made  disasters. Aegon’s systems and processes are designed to  support complex products and transactions and to avoid such  issues as system failures, financial crime and breaches of  security. Aegon is constantly working on analyses studying such  operational risks and regularly develops contingency plans to  deal with them. Aegon faces a number of risks, some of which may arise from  internal factors, such as inadequate compliance systems. Others,  such as movements in interest rates or unexpected changes in  longevity or mortality trends, are external in nature. Aegon’s  most significant risk is to changes in financial markets, related  particularly to movements in interest rates, equity and credit  markets. These risks, whether internal or external, may affect  the company’s operations, its earnings, its share price, the value  of its investments, or the sale of certain products and services.  A description of risks relating to Aegon’s businesses and risks  relating to Aegon’s common shares can be found on pages  317 to 332 of this Annual Report. Similar to 2012, interest rates remained low in the first half of  2013. In the second half of the year, long-term swap rates in  the United States, United Kingdom and the Eurozone increased  61 bps. In the United States, the duration of the investment  portfolio was increased by investing in long-term treasuries  and forward starting swaps. The US operations also finalized  a hedging program to project the capital position against a sharp  rise in interest rates. Also in 2013, the existing interest rate  programs remained in place for hedging guarantees for Aegon’s  operations in the Netherlands and at Variable Annuities. As an international company, Aegon is exposed to movements in  currency exchange rates. However, Aegon does not consider this  exposure to be material. The company holds its capital base in  various currencies in amounts that correspond to the book value  of individual business units, thus mitigating currency exchange  rate risk.  Equity markets trended upward in 2013. During 2013, Aegon  continued to progress its program of hedging equity risk at its UK  pension business, Variable Annuities, US and Dutch operations  to protect the company against a possible deterioration in  equity markets. The US business implemented a macro hedge  to protect the business capital position of Variable Annuities  from fluctuations in equity markets. As a result of a mismatch  between US statutory and IFRS accounting, this hedge showed  a negative impact on income before tax of EUR 590 million in  2013. The Dutch operations extended the existing equity hedge  program with an equity volatility hedge. Liquidity risk Underwriting risk Risk overview 2013 Credit risk Equity market risk and other investment risks  Operational risk Interest rate risk Currency exchange rate risk