Enterprise Risk Management
|
|
- Conrad Fletcher
- 5 years ago
- Views:
Transcription
1 Enterprise Risk Management Its implications, benefits and process by Janice Englesbe, CFA, and Abbe Bensimon, FCAS, MAAA, Gen Re Capital Consultants A Berkshire Hathaway Company
2 The 2005 hurricane season took everyone by surprise, and many insurance companies had significant losses beyond their worst expectations. While claims from Hurricanes Katrina, Rita and Wilma may not be settled for years, the rating agencies reactions have been swift. A.M. Best says: the impact of huge losses as well as the increased volatility of the investment markets and corporate governance failures, have raised the importance of risk management and placed a premium on gathering and evaluating the most critical information related to risk management at the enterprise level. 1 As a result, the rating agencies are not only increasing capital requirements, they are also being more stringent by explicitly incorporating Enterprise Risk Management (ERM) into their rating processes. While much has been written on the topic of ERM, our intent in this article is to briefly describe the ERM process, its benefits and implications. We will then examine how the rating agencies have taken up ERM as an important aspect of the rating process. What is ERM? ERM begins as a capital preservation process that helps insurers identify, quantify and manage risks from all sources that exist throughout the corporation, including investments, underwriting, operational and reputational. It considers the accumulation and diversification of risk. ERM uses the organization s past experience to help evaluate future business plans to manage the unexpected. However, ERM is more than a forward-looking capital preservation tool. A fully-developed ERM discipline frames business decisions as risk/return trade-offs and creates the link between financial risk management and strategic business planning. By fully harnessing the power of ERM, companies can gain competitive advantage. ERM Tools There is no one right way to do ERM. Each organization develops ERM disciplines to reflect their own needs, business platform and market position. Some companies choose to begin the ERM process on a qualitative basis by using tools such as risk mapping while others use quantitative economic financial models, like dynamic financial analysis (DFA). Risk Mapping In a risk mapping exercise, management teams identify, classify and prioritize the risks that affect the entire organization. Risk maps help refine the understanding of the exposures being managed and measure the effectiveness of the mitigation strategies employed. 2 One of the most important features of risk mapping is its low-cost, high-impact introduction to enterprise risk management that builds on the company s existing structure. It enables a management team to develop a comprehensive list of risks faced by the company and builds support within that team for involvement in the enterprise s risk management process. 3 Risk mapping is an effective tool in corporate governance, and often can be the foundation for quantitative risk and economic capital modeling. 1 Gen Re Capital Consultants
3 Economic Capital Models Capital models assess whether the amount of a company s economic capital is sufficient to support the retained risks in a severe loss situation. Models for this include the well-known, risk-based capital models and solvency reviews already in place with various regulatory bodies and rating agencies. DFA is a specific type of economic capital model that simulates a company s financial results under possible scenarios of changing conditions that a company can face. [GRCC has written about DFA tools in the Spring 2005 edition of Regarding Risk, Dynamic Financial Modeling Measuring Risk for Better Decisions. ] Not only does DFA present expected profitability given a choice or decision, it also measures the economic impact of these choices on a company s performance. Its ability to quantitatively assess downside risk provides valuable information to management in judging whether a decision s expected profitability is worth its risk. When integrated with a company s qualitative risk mapping, DFA model enterprise risk metrics are particularly effective. GRCC s Economic Capital Model Current Book and Business Plan Economic Factors Individual Assets Individual Loss Events Asset Proxy (Duration/ Convexity/Credit) Fit Frequency and Severity Distributions Correlation Simulation Enterprise Risk/Return Economic Capital Catastrophe Event Tables Aggregated Losses ERM and the Importance of Corporate Culture No matter which ERM tools a company chooses to use, or where they are in the process, the successful implementation of ERM is wholly dependent upon the organization s (1) willingness to learn ERM concepts; (2) belief that a tailored ERM could be beneficial; (3) allocation of resources to develop an effective ERM discipline for the organization; and (4) understanding that success of an implementation is contingent upon communicating and selling the ERM strategy to all stakeholders. In short, it needs to become part of a company s culture. Analytics need to be aligned with business knowledge, and integrated with decision-making. When this alignment occurs, the culture will promote disciplined decision making that is understood and consistently applied throughout the organization. Specifics on Rating Agencies Approaches to ERM Each of the rating agencies is taking its own approach to recognizing ERM and economic capital in the rating process. A.M. Best has chosen to integrate ERM throughout its analysis of a company. They will look at ERM holistically, asking questions such as, Does the insurer have a strong risk management program vis à vis its capital strength, operating performance and business profile? Instead of requiring a high level of sophistication at the outset, A.M. Best s approach to evaluating ERM will be fluid and is expected to evolve as more information is gathered about companies ERM capabilities. At this time, S&P s evaluation process appears to be more structured than A.M. Best s and looks for companies to meet specific criteria. Companies are evaluated on five major components of ERM: risk management culture, risk controls, extreme event management, risk and capital models, and strategic risk management. S&P places more emphasis on economic capital models than A.M. Best and looks for companies to specifically articulate risk tolerance. Fitch Ratings has just released exposure drafts on how its rating will reflect to ERM. 2
4 ERM Specifics A.M.Best As an initial part of its evaluation, A.M. Best has changed some questions in the 2006 Supplemental Rating Questionnaire (SRQ). New, detailed questions on terrorism and catastrophe exposure, the accuracy of financial and capital modeling, and exposure assessment, among other things, provide A.M. Best with a better understanding of both the company s risk management and tolerance for risk. The ability of a company to monitor, manage and discuss risks to its capitalization remains a key rating consideration and is also a fundamental part of a company s ERM. The information in the SRQ is a beginning for A.M. Best s evaluation of those capabilities. Some companies have proactively shared their enterprise-wide risk initiatives with A.M. Best rather than letting A.M. Best draw conclusions based on the data contained in the SRQ or specific questions posed by A.M. Best s analysts. A discussion about a company s qualitative risk mapping as described above, and the management process for evaluating those risks, is one way to share ERM disciplines with A.M. Best. For some companies, this qualitative work may be sufficient to address questions on ERM. Other companies choose to present their own capital modeling to A.M. Best as a tool for illustrating the company s proactive management of risk to capital. While there is no current requirement for a company to use a capital model, A.M. Best gives credit to companies who employ these models to the extent that the modeling is linked to a risk management strategy. BCAR continues to be A.M. Best s internal economic capital model. It is their starting point for the assessment of a company s capitalization, and provides A.M. Best a baseline for analysis and a relative ranking in terms of the company s capital. BCAR and a company s own capital modeling play different roles in A.M. Best s evaluation of companies as they have different goals and intended uses. The goal of BCAR is capital preservation, while the goal of economic capital models, such as DFA, is value creation. A.M. Best will evaluate those companies who do not present their own capital modeling only through the lens of BCAR and its capital preservation focus. ERM Specifics Standard & Poor s Taking a slightly different tack, S&P has chosen to view ERM as a separate, major category in its rating process by joining existing categories of Competitive Position, Management and Corporate Strategy, Operating Performance, Capitalization, Liquidity, Investments and Financial Flexibility. Similar to A.M. Best, S&P views ERM as an evolving analysis component over the next two years. They will seek input from the rated companies themselves for improvements to the analysis. S&P s ERM analysis will result in a determination of whether a company has Excellent, Strong, Adequate or Weak risk management. An Excellent insurer will consistently identify, measure and manage risk exposures within pre-determined tolerance guidelines. A Strong insurer is somewhat more likely to experience unexpected losses that are outside of its tolerance level. An Adequate insurer is defined as hav(ing) the capabilities to identify, measure, and manage most major risk exposure and losses, but the process has not been comprehensively extended to all significant risks facing the enterprise. Again, ERM is one, albeit important, component to the rating analysis. The importance of ERM in the overall rating will vary according to the insurer s situation regarding the ability to absorb risks and the complexity of those risks. S&P will test the ERM evaluations against their ratings over time and will review how the risk management process worked. Did companies learn from their mistakes? How? What modifications to the risk management processes result from unexpected losses? S&P also expects that ERM could be a leading indicator of slippage due to cycle deterioration (risk management standards slip as the market softens). Conclusion Clearly, ERM has come out from behind the curtain. All insurers, to some degree, will have to begin assessing their risk management capabilities and processes. ERM is a good business practice and companies can turn the new ERM standards set by rating agencies into a competitive advantage. If companies look beyond checking the box for meeting rating agency criteria, the real value of ERM can be realized and result in more profitable business practices down the road. Endnotes 1 A.M. Best Special Report: A.M. Best Comments on Enterprise Risk Management and Capital Models, Matthew C. Mosher, February Milliman, Best Practices for The Risk Mapping Process. 3 Id. at 2. Enterprise Risk Management 3
5 Who is GRCC? Gen Re Capital Consultants is a strategic consulting practice specializing in the property/casualty insurance industry. Our focus is on helping companies build a disciplined culture to support risk and capital management. We believe value creation for a company results from more informed decision making. Considered experts in the field of enterprise risk management, the GRCC team is comprised of specialists in: > Actuarial science > Corporate finance and accounting > Financial systems and technology > Reinsurance and insurance underwriting, structuring, pricing and reserving > Corporate governance > Rating agency interaction GRCC assists companies with the design and implementation of effective risk/capital initiatives. We work alongside our clients in a collaborative manner, as we understand management teams know their companies best. > Clients leverage our experience and avoid common pitfalls. > We aid management teams in communicating ERM disciplines with the Board of Directors. > We help companies establish a risk culture that is grounded in and benchmarked with observable metrics. We have completed over 110 projects for a broad range of stock and mutual insurers since we were formed in GRCC was selected by the Casualty Actuarial Society to set standards for DFA analysis and its application in setting business strategy. For quantitative analysis, we use our own proprietary, state-of-the-art DFA model developed by our team and customized to reflect our clients specific needs. Years of direct application with our client companies allows us to continually enhance the model. When integrated with your business knowledge and strong risk disciplines, this model helps your company harness the real value of enterprise risk management a competitive advantage. 4
6 For More Information If you have any questions about our proprietary, state-of-the-art tools, or to discuss your company s ERM needs, please contact Joan Lamm-Tennant at or jlammten@genre.com, Janice Englesbe at or jenglesb@genre.com, or Abbe Bensimon at or abensimo@genre.com. The people behind the promise 2006 General Re Corporation, Stamford, CT This information was compiled by Gen Re and is intended to provide background information to our clients, as well as to our professional staff. The information is time sensitive and may need to be revised and updated periodically. It is not intended to be professional advice. Gen Re assumes no liability for reliance on this material or any portion thereof for any purpose. ERM
A.M. Best s New Risk Management Standards
A.M. Best s New Risk Management Standards Stephanie Guethlein McElroy, A.M. Best Manager, Rating Criteria and Rating Relations Hubert Mueller, Towers Perrin, Principal March 24, 2008 Introduction A.M.
More informationUnlocking Value with Enterprise Risk Management. presented by Jim Toole, FSA, CERA, MAAA Bob Daino, FCAS, MAAA
Unlocking Value with Enterprise Risk Management presented by Jim Toole, FSA, CERA, MAAA Bob Daino, FCAS, MAAA August, 2009 Our Talk Today Why Enterprise Risk Management? The ERM Process A Risk Vocabulary
More informationEnterprise Risk Management Perspectives
Enterprise Risk Management Perspectives Enterprise Risk Management Symposium Chicago, Illinois March 30, 2007 Joan Lamm Tennant, PhD Gen Re Capital Consultants Enterprise Risk Management: Perspectives
More informationA.M. Best ERM SRQ Response Survey. March 2012
A.M. Best ERM SRQ Response Survey March 2012 Overview of A.M. Best s ERM SRQ section ERM section of SRQ added in 2011 to provide a consistent starting point for analyst discussions Key Questions Responses
More informationNavigating Financial. Maintaining the Momentum in Shifting Tides
Navigating Financial Strength Ratings Maintaining the Momentum in Shifting Tides Aon Benfield s Rating Agency Advisory group has substantial experience helping clients navigate various criteria changes
More informationInsurance companies make money by managing various types of risk the risk of
A.M. BEST METHODOLOGY April 2, 2013 Risk and the Rating Process for Insurance Companies Insurance companies make money by managing various types of risk the risk of dying too young, experiencing a loss
More informationA.M. Best s 2010 Supplemental Rating Questionnaire (SRQ)
A.M. Best s 2010 Supplemental Rating Questionnaire (SRQ) A briefing on Best s new SRQ questions January 2011 2011 Towers Watson. All rights reserved. BACKGROUND By February 1, A.M. Best will be releasing
More informationOWN RISK AND SOLVENCY ASSESSMENT. ERM Seminar Compliance All Dealing from the same deck now
OWN RISK AND SOLVENCY ASSESSMENT ERM Seminar - 2014 Compliance All Dealing from the same deck now Own and Solvency Assessment! Originated in the UK about 10 years ago Now a global insurance regulatory
More informationERM and ORSA Assuring a Necessary Level of Risk Control
ERM and ORSA Assuring a Necessary Level of Risk Control Dave Ingram, MAAA, FSA, CERA, FRM, PRM Chair of IAA Enterprise & Financial Risk Committee Executive Vice President, Willis Re September, 2012 1 DISCLAIMER
More informationRED 2.1 & 4.2: Quantifying Risk Exposure for ORSA. Moderator: Presenters: Lesley R. Bosniack, CERA, FCAS, MAAA
RED 2.1 & 4.2: Quantifying Risk Exposure for ORSA Moderator: Lesley R. Bosniack, CERA, FCAS, MAAA Presenters: Lesley R. Bosniack, CERA, FCAS, MAAA William Robert Wilkins, ASA, CERA, FCAS, MAAA SOA Antitrust
More informationThe Role of ERM in Reinsurance Decisions
The Role of ERM in Reinsurance Decisions Abbe S. Bensimon, FCAS, MAAA ERM Symposium Chicago, March 29, 2007 1 Agenda A Different Framework for Reinsurance Decision-Making An ERM Approach for Reinsurance
More informationINTERNATIONAL ASSOCIATION OF INSURANCE SUPERVISORS
Guidance Paper No. 2.2.6 INTERNATIONAL ASSOCIATION OF INSURANCE SUPERVISORS GUIDANCE PAPER ON ENTERPRISE RISK MANAGEMENT FOR CAPITAL ADEQUACY AND SOLVENCY PURPOSES OCTOBER 2007 This document was prepared
More informationINTERNATIONAL ASSOCIATION OF INSURANCE SUPERVISORS
Guidance Paper No. 2.2.x INTERNATIONAL ASSOCIATION OF INSURANCE SUPERVISORS GUIDANCE PAPER ON ENTERPRISE RISK MANAGEMENT FOR CAPITAL ADEQUACY AND SOLVENCY PURPOSES DRAFT, MARCH 2008 This document was prepared
More informationSharing insights on key industry issues*
Insurance This article is from a PricewaterhouseCoopers publication entitled Insurancedigest Sharing insights on key industry issues* European edition September 2008 Is your ERM delivering? Authors: Robert
More informationRisk & Analytics. Trends within Insurance Companies Risk Management. Marc Paasch June Willis Towers Watson. All rights reserved.
Risk & Analytics Trends within Insurance Companies Risk Management Marc Paasch June 2017 2017 Willis Towers Watson. All rights reserved. Key drivers & benefits Outcomes from an analytical approach to own
More informationAmerican Academy of Actuaries Webinar: The Practice of ERM in the Insurance Industry. Enterprise Risk Management Committee November 19, 2013
American Academy of Actuaries Webinar: The Practice of ERM in the Insurance Industry Enterprise Risk Management Committee November 19, 2013 All Rights Reserved. 1 Presenters Bruce Jones, MAAA, FCAS, CERA
More informationERM in the Rating Process: A Practical Perspective
ERM in the Rating Process: A Practical Perspective Jeffrey Mango, Group Vice President, A.M. Best Michelle Baurkot, Assistant Vice President, A.M. Best Tom Zitelli, Managing Senior Financial Analyst, A.M.
More informationSubject SP9 Enterprise Risk Management Specialist Principles Syllabus
Subject SP9 Enterprise Risk Management Specialist Principles Syllabus for the 2019 exams 1 June 2018 Enterprise Risk Management Specialist Principles Aim The aim of the Enterprise Risk Management (ERM)
More informationCriteria Insurance General: Refined Methodology For Assessing An Insurer's Risk Appetite. Table Of Contents
March 30, 2010 Criteria Insurance General: Refined Methodology For Assessing An Insurer's Risk Appetite Primary Credit Analyst: Marcus Bowser, London +44(207) 176 7052; marcus_bowser@standardandpoors.com
More informationEnterprise Risk Management (ERM)
Southeastern Actuaries Conference Enterprise Risk Management (ERM) November 16, 2007 ING. Your future. Made easier. Agenda ERM Are you doing it? Definition of ERM What is it? Industry Overview What is
More informationGlobal Enterprise Risk Management in Insurance
Global Enterprise Risk Management in Insurance Caroline Bennet National Leader, Deloitte Actuaries & Consultants Australia Meeting the Challenges of Change 14 th Global Conference of Actuaries 19 th 21
More informationSolvency II. Building an internal model in the Solvency II context. Montreal September 2010
Solvency II Building an internal model in the Solvency II context Montreal September 2010 Agenda 1 Putting figures on insurance risks (Pillar I) 2 Embedding the internal model into Solvency II framework
More informationNew Actuarial Standards of Practice No. 46 Risk Evaluation in ERM No. 47 Risk Treatment in ERM
New Actuarial Standards of Practice No. 46 Risk Evaluation in ERM No. 47 Risk Treatment in ERM August 1, 2013 1 Professional Disclaimer Any opinions expressed within this presentation are the presenter
More informationReinsurance Symposium 2016
Reinsurance Symposium 2016 MAY 10 12, 2016 GEN RE HOME OFFICE, STAMFORD, CT A Berkshire Hathaway Company Reinsurance Symposium 2016 MAY 10 12, 2016 GEN RE HOME OFFICE, STAMFORD, CT Developing a Treaty
More informationGuidance Note: Stress Testing Credit Unions with Assets Greater than $500 million. May Ce document est également disponible en français.
Guidance Note: Stress Testing Credit Unions with Assets Greater than $500 million May 2017 Ce document est également disponible en français. Applicability This Guidance Note is for use by all credit unions
More informationEnterprise Risk Management Economic Capital Modleing and the Financial Crisis
Risk Management and The Crisis Enterprise Risk Management Economic Capital Modleing and the Financial Crisis What worked and what did not Insurance Industry Continues to Respond to Risk Dynamics Risk Sources
More informationSolvency II Insights for North American Insurers. CAS Centennial Meeting Damon Paisley Bill VonSeggern November 10, 2014
Solvency II Insights for North American Insurers CAS Centennial Meeting Damon Paisley Bill VonSeggern November 10, 2014 Agenda 1 Introduction to Solvency II 2 Pillar I 3 Pillar II and Governance 4 North
More informationBest s Credit Rating Methodology (BCRM) & Market Segment Outlooks
Special Presentation at the Gen Re Winter Forum Best s Credit Rating Methodology (BCRM) & Market Segment Outlooks Stefan Holzberger Chief Rating Officer St. Petersburg, Florida 19 January 2017 Disclaimer
More informationMethodology Review Seminar
etc.venues St.Paul s, London Methodology Review Seminar 16 November 2016 Methodology Review Seminar Welcome and Introduction Overview of the Structural Changes to Best's Credit Rating Methodology Greg
More informationOwn Risk Solvency Assessment (ORSA) Linking Risk Management, Capital Management and Strategic Planning
Own Risk Solvency Assessment (ORSA) Linking Risk Management, Capital Management and Strategic Planning Moderator: David Holland, Risk Director, Ally Insurance SPEAKERS Mary-ellen Coggins, Managing Director,
More informationORSA reports: gaps and opportunities
ORSA reports: gaps and opportunities Market benchmarking of ORSA reports for Singapore general insurers Industry-wide Own Risk and Solvency Assessment (ORSA) 1 2 Contents 1 Executive summary 2 Our assessment
More informationBEST S CREDIT RATING METHODOLOGY (BCRM)
JANUARY 2018 BEST S CREDIT RATING METHODOLOGY (BCRM) AN OVERVIEW This overview document provides a quick look at the components of Best's Credit Rating Methodology (BCRM) and rating process. For more information
More informationENTERPRISE RISK MANAGEMENT (ERM) The Conceptual Framework
ENTERPRISE RISK MANAGEMENT (ERM) The Conceptual Framework ENTERPRISE RISK MANAGEMENT (ERM) ERM Definition The Conceptual Frameworks: CAS and COSO Risk Categories Implementing ERM Why ERM? ERM Maturity
More informationWhat Is Enterprise Risk Management?
What Is Enterprise Risk Management? April 24, 2006 Marty Przygoda AVP, Enterprise Risk Management 2002 Allstate Insurance Company Before we start talking about ERM, it might be helpful to know who we are...
More informationInvestment Management Philosophy
Investment Management Philosophy Executive Overview The investment marketplace has grown increasingly complex and unpredictable for individual investors. This reality may make it difficult for many people
More informationEnterprise Risk Management (ERM) Module 3.0 (CERA/FSA)
FSA QFI, INDIVIDUAL LIFE AND ANNUITIES, RETIRMEMENT BENEFITS, GENERAL INSURANCE TRACKS CERA ALL TRACKS Enterprise Risk Management (ERM) Module 3.0 (CERA/FSA) SECTION 1: MODULE OVERVIEW Quick! Try to name
More informationERM in the U.S. life and annuity industry
Milliman Research Report Prepared by: Anna Berezovskaya, FSA, MAAA Tony Dardis, FSA, MAAA, CERA, CFA June 016 01 Survey - Summary report Milliman For a copy of the full report, please contact the authors.
More informationENTERPRISE RISK MANAGEMENT, INTERNAL MODELS AND OPERATIONAL RISK FOR LIFE INSURERS DISCUSSION PAPER DP14-09
ENTERPRISE RISK MANAGEMENT, INTERNAL MODELS AND FOR LIFE INSURERS DISCUSSION PAPER DP14-09 This paper is issued by the Insurance and Pensions Authority ( the IPA ), the regulatory authority responsible
More informationMonograph. Competitive Intelligence An Insurance Policy for Pricing Kathryn A. Walker, FCAS, MAAA, CPCU ABOUT THE AUTHOR KEY POINT
Commitment Beyond Numbers Monograph pinnacleactuaries.com ABOUT THE AUTHOR Kathryn A. Walker FCAS, MAAA, CPCU Katey Walker is a Consulting Actuary with Pinnacle Actuarial Resources, Inc. in the firm s
More informationDefining the Internal Model for Risk & Capital Management under the Solvency II Directive
14 Defining the Internal Model for Risk & Capital Management under the Solvency II Directive Mark Dougherty is an international Senior Corporate Governance and Risk Management professional and Chartered
More informationCanopius Managing Agents - Syndicate 4444
January 23, 2009 Canopius Managing Agents - Syndicate 4444 Primary Credit Analyst: Eoin Naughton, London (44) 20-7176-7047; eoin_naughton@standardandpoors.com Secondary Credit Analyst: Kevin Willis, London
More informationAMERICAN INTERNATIONAL GROUP, INC. ECONOMIC CAPITAL MODELING INITIATIVE & APPLICATIONS
AMERICAN INTERNATIONAL GROUP, INC. ECONOMIC CAPITAL MODELING INITIATIVE & APPLICATIONS November 2007 Update INTRODUCTION AIG has made significant progress to date on its economic capital modeling initiative
More informationBeyond Basel II: Leveraging Economic Capital to Achieve Strategic Objectives
Enterprise Risk Management Symposium Beyond Basel II: Leveraging Economic Capital to Achieve Strategic Objectives March 2007 Ashish Dev adev@promontory.com Broader Concept of ERM with EC as the cornerstone
More informationNAIC OWN RISK AND SOLVENCY ASSESSMENT (ORSA) GUIDANCE MANUAL
NAIC OWN RISK AND SOLVENCY ASSESSMENT (ORSA) GUIDANCE MANUAL Created by the NAIC Group Solvency Issues Working Group Of the Solvency Modernization Initiatives (EX) Task Force 2011 National Association
More informationECONOMIC CAPITAL MODELING CARe Seminar JUNE 2016
ECONOMIC CAPITAL MODELING CARe Seminar JUNE 2016 Boston Catherine Eska The Hanover Insurance Group Paul Silberbush Guy Carpenter & Co. Ronald Wilkins - PartnerRe Economic Capital Modeling Safe Harbor Notice
More informationA.M. Best Ratings Impact from the New Rating Methodology and Stochastic-based BCAR
A.M. Best Ratings Impact from the New Rating Methodology and Stochastic-based BCAR September 2017 Prepared by Aon Benfield Executive Summary A.M. Best is expected to finalize new rating criteria by mid-october
More information2014 Own Risk and Solvency Assessment (ORSA) Feedback Pilot Project Observations of the Group Solvency Issues (E) Working Group
2014 Own Risk and Solvency Assessment (ORSA) Feedback Pilot Project Observations of the Group Solvency Issues (E) Working Group During October 2014 through June 2015, a third ORSA Feedback Pilot Project
More informationRisk Appetite for Life Offices IFoA working party
Risk Appetite for Life Offices IFoA working party Gautam Kakar, Chairman 30 October 2015 Members of Working Party: Gautam Kakar Lana Nguyen Shayanthan Pathmanathan Rod Bryn-Hussey Fabio Schiaffini Crystal
More informationThe use of an Economic Capital Model within an Enterprise Risk Management framework
The use of an Economic Capital Model within an Enterprise Risk Management framework David Ingram, Senior Director Standard & Poor s Ratings Services December, 2007 Copyright (c) 2006 Standard & Poor s,
More informationPrudential Standard GOI 3 Risk Management and Internal Controls for Insurers
Prudential Standard GOI 3 Risk Management and Internal Controls for Insurers Objectives and Key Requirements of this Prudential Standard Effective risk management is fundamental to the prudent management
More informationUnderwriting human progress. Lloyd s Australia
Underwriting human progress Lloyd s Australia What is Lloyd s? Lloyd s is the world s specialist insurance and reinsurance market. With expertise earned over centuries, Lloyd s is the foundation of the
More informationThe Rating Agency View of Capital Modelling. Simon Harris Team Managing Director European Insurance
The Rating Agency View of Capital Modelling Simon Harris Team Managing Director European Insurance September 2007 Agenda The importance of risk and capitalisation in the rating process Moody s approach
More informationSections of the ORSA Report
Lessons Learned From Orsa Reviews Impact on Risk Focused Examination NAIC Insurance Summit INS Companies Joe Fritsch, Director INS Companies Don Carbone, Exam Manager INS Companies Sections of the ORSA
More informationRisk averse. Patient.
Risk averse. Patient. Opportunistic. For discretionary use by investment professionals. Litman Gregory Portfolio Strategies at a Glance We employ tactical asset allocation by identifying undervalued asset
More informationGuideline. Own Risk and Solvency Assessment. Category: Sound Business and Financial Practices. No: E-19 Date: November 2015
Guideline Subject: Category: Sound Business and Financial Practices No: E-19 Date: November 2015 This guideline sets out OSFI s expectations with respect to the Own Risk and Solvency Assessment (ORSA)
More informationQ&A on A.M. Best s Updated Credit Rating Methodology
BEST S BRIEFING Our Insight, Your Advantage. October 13, 2017 A.M. Best anticipates that fewer than 5% of its current credit ratings will change owing to the adoption of the updated BCRM Q&A on A.M. Best
More informationNYISO Capital Budgeting Process. Draft 01/13/03
NYISO Capital Budgeting Process Draft 01/13/03 1 1.0 INTRODUCTION An effective, capital budgeting process is essential to ensure sound capital investment decisions. This report details a recommended approach
More informationSTRESS TESTING GUIDELINE
c DRAFT STRESS TESTING GUIDELINE November 2011 TABLE OF CONTENTS Preamble... 2 Introduction... 3 Coming into effect and updating... 6 1. Stress testing... 7 A. Concept... 7 B. Approaches underlying stress
More informationEnterprise Risk Management Framework: Is It Working Effectively or Is It Window Dressing?
Enterprise Risk Management Framework: Is It Working Effectively or Is It Window Dressing? Joseph F. Morris jmorris@pcicstrategies.com 215-901-0334 www.pcicstrategies.com Property Casualty Insurers Association
More informationEnterprise risk management: How are companies gaining value from their ERM strategies?
Milliman Preliminary results The inaugural survey from the Milliman Risk Institute Enterprise risk management: How are companies gaining value from their ERM strategies? Preliminary results Milliman is
More informationA.M. Best s Updated Credit Rating Methodology and Capital Model. Robert Raber Senior Financial Analyst A.M. Best Company
A.M. Best s Updated Credit Rating Methodology and Capital Model Robert Raber Senior Financial Analyst A.M. Best Company 1 Contents A.M. Best Company Overview Updated Best s Credit Rating Methodology (BCRM)
More informationManaging Health Care Reserves: Aligning Operating Assets with Broader Organizational Goals
Managing Health Care Reserves: Aligning Operating Assets with Broader Organizational Goals Enterprise Risk Management for Health Care Organizations June 2017 Investment advice and consulting services provided
More informationAon Risk Maturity Index
Aon Risk Solutions Aon Risk Maturity Index Insight Report, October 2017 Table of Contents Executive Summary.... 1 Managing Risk in a Volatile Environment.... 2 Links to Risk Maturity.... 3 Stock Price
More informationUnderstanding BCAR for U.S. Property/Casualty Insurers
BEST S METHODOLOGY AND CRITERIA Understanding BCAR for U.S. Property/Casualty Insurers October 13, 2017 Thomas Mount: 1 908 439 2200 Ext. 5155 Thomas.Mount@ambest.com Stephen Irwin: 908 439 2200 Ext. 5454
More informationCapturing Risk Appetite Through ERM - Implementation Challenges
Capturing Risk Appetite Through ERM - Implementation Challenges ERM Symposium, Chicago March 14-16, 2011 Varun Agarwal, SVP, Risk Strategy, HSBC Venkat Veeramani, Manager, Risk Strategy, HSBC Table of
More informationUpcoming Changes to AM Best s Insurance Rating Methodology
Upcoming Changes to AM Best s Insurance Rating Methodology IASA Carolinas August 17 th, 2017 Biographies Nitin Chhabra, FCAS Senior Investment Strategist Nitin joined Prime Advisors, Inc. in 2016 as a
More informationOwn Risk and Solvency Assessment (ORSA)
Own Risk and Solvency Assessment (ORSA) Presentations to OCCA (Nov. 19, 2014) and AAIARD (Nov. 21, 2014) Jacqueline Friedland, FCIA, FCAS, FSA, MAAA Chief Actuary, RSA Canada Presentation Outline What
More informationGuidance paper on the use of internal models for risk and capital management purposes by insurers
Guidance paper on the use of internal models for risk and capital management purposes by insurers October 1, 2008 Stuart Wason Chair, IAA Solvency Sub-Committee Agenda Introduction Global need for guidance
More informationBERMUDA MONETARY AUTHORITY THE INSURANCE CODE OF CONDUCT FEBRUARY 2010
Table of Contents 0. Introduction..2 1. Preliminary...3 2. Proportionality principle...3 3. Corporate governance...4 4. Risk management..9 5. Governance mechanism..17 6. Outsourcing...21 7. Market discipline
More informationLloyd s Asia. Underwriting human progress
Lloyd s Asia Underwriting human progress What is Lloyd s? Lloyd s is the world s specialist insurance and reinsurance market. With expertise earned over centuries, Lloyd s is the foundation of the insurance
More informationESTABLISHING RISK BOUNDARIES. Michel Rochette, MBA, FSA Caribbean Actuarial Association Annual Meeting Trinidad & Tobago December 4th 2008
ESTABLISHING RISK BOUNDARIES Michel Rochette, MBA, FSA Caribbean Actuarial Association Annual Meeting Trinidad & Tobago December 4th 2008 TOPICS Context from 2006 to 2008 Risk appetite and ERM Definition
More informationBest s Credit Rating Methodology (BCRM) & MPL Insurer Ratings
Special Presentation at the PIAA CEO/COO Meeting Best s Credit Rating Methodology (BCRM) & MPL Insurer Ratings Stefan Holzberger Chief Rating Officer Scottsdale, Arizona 16 March 2017 Disclaimer (1) AM
More informationWespath Analytical Insights ESG Integration in External Asset Manager Selection
Wespath Analytical Insights ESG Integration in External Asset Manager Selection Uncovering Managers ESG Strengths in the Search Process a division of Wespath Benefits and Investments, a general agency
More informationThe Hartford Financial Services Group
May 23, 2006 Investor Day The Hartford Financial Services Group Enterprise Risk Management David Johnson Executive Vice President Chief Financial Officer The Hartford Financial Services Group, Inc. Safe
More informationDoes ERM matter?* Enterprise risk management for the insurance industry
Insurance Does ERM matter?* Enterprise risk management for the insurance industry A global study June 2008 *connectedthinking PwC ERM: the past.. In 2004, PricewaterhouseCoopers asked insurers about their
More information4. This letter sets out our key regulatory priorities for 2017 for insurance companies and covers the following areas:
15 March 2017 Dear CEO, Key areas of focus for insurance company Boards Gibraltar Financial Services Commission PO Box 940 Suite 3, Ground Floor Atlantic Suites Europort Avenue Gibraltar Tel (+350) 200
More informationLloyd s Asia. Underwriting human progress. Lloyds Global Brochure - ASIA_154x233_V6.indd 1 22/08/ :51
Lloyd s Asia Underwriting human progress Lloyds Global Brochure - ASIA_154x233_V6.indd 1 22/08/2016 10:51 What is Lloyd s? Lloyd s is the world s specialist insurance and reinsurance market. With expertise
More informationREGULATORY GUIDELINE Liquidity Risk Management Principles TABLE OF CONTENTS. I. Introduction II. Purpose and Scope III. Principles...
REGULATORY GUIDELINE Liquidity Risk Management Principles SYSTEM COMMUNICATION NUMBER Guideline 2015-02 ISSUE DATE June 2015 TABLE OF CONTENTS I. Introduction... 1 II. Purpose and Scope... 1 III. Principles...
More informationA.M. Best s Rating Approach. Anthony Diodato Group Vice President - North American Property & Casualty
A.M. Best s Rating Approach Anthony Diodato Group Vice President - North American Property & Casualty Disclaimer AM Best Company (AMB) and/or its licensors and affiliates. All rights reserved. ALL INFORMATION
More informationAdvances in Catastrophe Modeling Primary Insurance Perspective
Advances in Catastrophe Modeling Primary Insurance Perspective Jon Ward May 2015 The Underwriter must be Empowered The foundational element of our industry is underwriting A model will never replace the
More informationExploring the New Era of ORSA Enterprise Risk Management (ERM)/ Own Risk and Solvency Assessment (ORSA) Committee
Exploring the New Era of ORSA Enterprise Risk Management (ERM)/ Own Risk and Solvency Assessment (ORSA) Committee Copyright 2015 by the American Academy of Actuaries. All Rights Reserved. Presenters Tricia
More informationRISK MANAGEMENT. Budgeting, d) Timing, e) Risk Categories,(RBS) f) 4. EEF. Definitions of risk probability and impact, g) 5. OPA
RISK MANAGEMENT 11.1 Plan Risk Management: The process of DEFINING HOW to conduct risk management activities for a project. In Plan Risk Management, the remaining FIVE risk management processes are PLANNED
More informationEmerging Trends in Quantitative ERM
Annual 2016 URS User Group Forum Emerging Trends in Quantitative ERM ZZ NAIC ORSA Update Elisabetta Russo, ERM Advisor, FIA, MAAA erusso@naic.org cell: +1 718 286 9450 2 Content Current status of NAIC
More informationERM Implementation and the Own Risk and Solvency Assessment (ORSA)
ERM Implementation and the Own Risk and Solvency Assessment (ORSA) Kevin Olberding June 2013 1 Agenda ERM IMPLEMENTATION AND THE OWN RISK AND SOLVENCY ASSESSMENT (ORSA) Evolution of Enterprise Risk Management
More informationStochastic Analysis Of Long Term Multiple-Decrement Contracts
Stochastic Analysis Of Long Term Multiple-Decrement Contracts Matthew Clark, FSA, MAAA and Chad Runchey, FSA, MAAA Ernst & Young LLP January 2008 Table of Contents Executive Summary...3 Introduction...6
More informationMay 2015 DISCUSSION DRAFT For Illustrative Purposes Only Content NOT Reviewed or Approved by the Actuarial Standards Board DISCUSSION DRAFT
DISCUSSION DRAFT Capital Adequacy Assessment for Insurers Developed by the Enterprise Risk Management Committee of the Actuarial Standards Board TABLE OF CONTENTS Transmittal Memorandum iv STANDARD OF
More informationInternal Model Industry Forum (IMIF) Workstream G: Dependencies and Diversification. 2 February Jonathan Bilbul Russell Ward
Internal Model Industry Forum (IMIF) Workstream G: Dependencies and Diversification Jonathan Bilbul Russell Ward 2 February 2015 020211 Background Within all of our companies internal models, diversification
More informationUnderstanding Best s Capital Adequacy Ratio (BCAR) for U.S. Property/Casualty Insurers
Understanding Best s Capital Adequacy Ratio (BCAR) for U.S. Property/Casualty Insurers Analytical Contact March 1, 216 Thomas Mount, Oldwick +1 (98) 439-22 Ext. 5155 Thomas.Mount@ambest.com Understanding
More informationKey ERM Components. November 2007
Key ERM Components November 2007 Topics Risk Management and Enterprise Risk Management (ERM) what s the difference? Key Elements of an ERM Framework Importance to the Actuarial Profession Risk Management
More informationSubject ST9 Enterprise Risk Management Syllabus
Subject ST9 Enterprise Risk Management Syllabus for the 2018 exams 1 June 2017 Aim The aim of the Enterprise Risk Management (ERM) Specialist Technical subject is to instil in successful candidates the
More informationERM and Reserve Risk
ERM and Reserve Risk Alietia Caughron, PhD CNA Insurance Casualty Actuarial Society s 2014 Centennial Celebration and Annual Meeting New York City, NY November 11, 2014 Disclaimer The purpose of this presentation
More informationLITMAN/GREGORY. Investment Strategies
Investment Strategies For Client Use Investment Strategies Litman/Gregory Portfolios at a Glance Litman/Gregory s tactical asset allocation expertise helps identify undervalued asset classes and weights
More informationOverview of ERM Assessment Viewpoints (June 2016) Overview
ERM assessment main category Culture & Governance Control & Capital Adequacy Profile & Measurement Application to Business Management Overview of ERM Assessment Viewpoints (June 2016) Overview Examine
More informationEmbrace the Solvency II internal model
October 2011 Embrace the Solvency II internal model Executive summary Insurers continue to question the benefits of Solvency II and whether the internal model will justify its considerable cost. Embracing
More informationEnterprise Risk Management
ASSOCIATION ACTUARIELLE INTERNATIONALE INTERNATIONAL ACTUARIAL ASSOCIATION Enterprise Risk Management All of life is the management of risk, not its elimination Walter Wriston, former chairman of Citicorp
More informationERM Capability A Rating Agency s View. David N. Ingram, CERA Director Enterprise Risk Management, Financial Services Ratings Standard & Poor s
ERM Capability A Rating Agency s View David N. Ingram, CERA Director Enterprise Risk Management, Financial Services Ratings Standard & Poor s The materials in this presentation represent the views of Standard
More informationWhat will Basel II mean for community banks? This
COMMUNITY BANKING and the Assessment of What will Basel II mean for community banks? This question can t be answered without first understanding economic capital. The FDIC recently produced an excellent
More informationUsing Solvency II to implement IFRS 17
www.pwc.co.uk 4 Using Solvency II to implement IFRS 17 September 2017 How can you make the best use of existing Solvency II systems and processes to ensure as smooth and efficient a transition to IFRS
More informationFoundations of Risk Management
Foundations of Risk Management Introduction Level 1 Foundations of Risk Management Topics 1. 2. CORPORATE RISK MANAGEMENT: A PRIMER 3. CORPORATE GOVERNANCE AND RISK MANAGEMENT 4. WHAT IS ERM? 5. RISK-TAKING
More informationSoutheastern Actuaries Conference 2012 Annual Meeting. Jeffrey S. Schlinsog, CFA, FSA, MAAA
www.pwc.com November 15, 2012 ERM Topics Southeastern Actuaries Conference 2012 Annual Meeting Jeffrey S. Schlinsog, CFA, FSA, MAAA ERM Topics 1. The development and implementation of the ORSA 2. The contents
More information