Session 8A: Risk Appetite in Practice. Moderator: Presenters: Anthony Dardis, FSA, CERA, FIA, MAAA. Damon Levine
|
|
- Chastity Sutton
- 5 years ago
- Views:
Transcription
1 Session 8A: Risk Appetite in Practice Moderator: Anthony Dardis, FSA, CERA, FIA, MAAA Presenters: Anthony Dardis, FSA, CERA, FIA, MAAA Damon Levine SOA Antitrust Disclaimer SOA Presentation Disclaimer
2 RISK APPETITE: THEORY AND PRACTICE DAMON LEVINE, CFA, CRCMP ERM SYMPOSIUM 2017, NEW ORLEANS
3 You want a valve that doesn't leak and you try everything possible to develop one. But the real world provides you with a leaky valve. You have to determine how much leakiness you can tolerate. -Arthur Rudolph
4 AGENDA Overview: Definitions, Goals, and Attributes Appetite Statements Parameterization and Cascading to LOBs With examples from world famous insurer Company XYZ! Measurement and Monitoring Review and Evolution
5 I. Overview: Definitions, Goals, and Attributes In theory there is no difference between theory and practice. In practice there is. -Yogi Berra
6 RISK APPETITE DEFINED The amount and type of risk that an organization is willing to take in order to meet their strategic objectives The Institute of Risk Management The total exposed amount that an organization wishes to undertake on the basis of risk-return trade-offs for one or more desired and expected outcomes The Risk and Insurance Management Society (RIMS) The level of aggregate risk that an organization can undertake and successfully manage over an extended period of time the broad-based amount of risk an organization or other entity is willing to accept in pursuit of its mission or vision Society of Actuaries
7 MEANWHILE IN THE NAIC ORSA GUIDANCE MANUAL Risk Appetite, Tolerances and Limits A formal risk appetite statement, and associated risk tolerances and limits are foundational elements of risk management for an insurer; understanding of the risk appetite statement ensures alignment with risk strategy by the board of directors.
8 NAIC ORSA (CONT D) Risk Appetite Documents the overall principles that a company follows with respect to risktaking, given its business strategy, financial soundness objectives and capital resources. Often stated in qualitative terms, a risk appetite defines how an organization weighs strategic decisions and communicates its strategy to key stakeholders with respect to risk-taking. It is designed to enhance management s ability to make informed and effective business decisions while keeping risk exposures within acceptable boundaries
9 NAIC ORSA (CONT D) Risk Limit Typically quantitative boundaries that control the amount of risk that a company takes Risk Tolerance The company s quantitative and qualitative boundaries around risk-taking, consistent with its risk appetite
10 THEREFORE WE SHOULD Ignore terminology and just do the work?!?
11 RISK APPETITE FRAMEWORK (A LA DELOITTE 1 ) The policies, processes, skills and systems needed in order that risk appetite is the way the firm and its people across all business and control functions talk, think and do risk [in order to ] Set the strategic plan and objectives as well as the risk strategy and risk capacity Articulate and cascade [to LOBs] risk appetite statements and limits Monitor and report risk profile versus appetite Control and correct the risk profile should it deviate from appetite, and reassess the risk appetite and, as the case may be, its strategy in the light of changes in the business, competitive or control environments
12 CORE PRINCIPLES DESCRIBED BY THE NORTH AMERICAN CRO COUNCIL 2 Establishing a comprehensive RAF should be approached in an iterative fashion The RAF should reflect the diverse interests of parties relevant in achieving company objectives Compliance with the frameworks limits/tolerances should be realistic and attainable The RAF should identify and quantify risk preferences for material risks Risk appetite statements and limits should be reviewed and possibly revised after significant events, and at least annually, by the Board
13 COMPANY XYZ S PRACTICAL CONSIDERATIONS Aim for a RAF which meets the CRO Council s core principles When defining the company s appetite, begin with the past Do not create immediate and widespread non-compliance Connect to the Plan process to ensure value and create buy-in Do not assume that all enterprise level tolerances must be cascaded It is not practical to always seek quantitative limits or linkages
14 THE COMPANY S RAF AXIOMS 3 A RAF includes enterprise level statements describing the preferred types and amounts of risk the company is willing to assume in pursuit of its business objectives The above statements include limits, targets, tolerances, or constraints relating to key profit and solvency measures and relating to each high-level risk category in the risk taxonomy (e.g. risks categorized as financial, market, legal/regulatory, insurance, strategic, and operational) When appropriate, there are line of business (LOB) level limits to support the enterprise level statements
15 THE COMPANY S RAF AXIOMS (CONT D) There exists a monitoring and reporting structure to measure actual exposures against the system of limits and tolerances at both the business unit and enterprise levels, detects/reports breaches, and triggers appropriate remediation When feasible, quantitative methods are employed because they are objectively defined, leave little room for misinterpretation, and aid in making the RAF operational. An enterprise risk model capturing LOB correlations and interrelationships is in place which can model prescribed scenarios or be run stochastically
16 II. Appetite Statements Don`t be afraid to take a big step when one is indicated. You can`t cross a chasm in two small steps. -David Lloyd George
17 METRIC-BASED RISK APPETITE STATEMENTS The Company regards risk appetite statements as enterprise-level targets or constraints and defines these statements which link to key metrics Earnings: We are x% confident that the Plan earnings for the Company will not be missed by more than 15%; i.e., the estimated probability of achieving at least 85% of Plan earnings is x% ROE: We are 85% confident that the Company s achieved return on equity (ROE) y% Capital: The aggregate capital at the legal entities and the holding company is sufficient to cover all obligations and expenses, over a one year horizon, in any modeled scenario having greater than a 1 in 200 annual probability Franchise Value: The annual probability of a reduction in franchise value (e.g. present value of free cash flows) of 10% or more is at most z%
18 TAXONOMY-BASED RISK APPETITE STATEMENTS In pursuit of its business goals the Company s risk preferences, in decreasing order, are insurance, strategic, market, legal/regulatory, & operational For insurance risk scenarios with probability of at least 10% ( p.10 ), the worst modeled impact to earnings is at most I 1 % of Plan For strategic risk scenarios with p.10, the worst impact to earnings is at most I 2 % of Plan For market risk scenarios (p.10), the worst impact to earnings is at most I 3 % of Plan For legal/regulatory risk scenarios (p.10), the worst impact to earnings is at most I 4 % of Plan For operational risk scenario (p.10), the worst impact to earnings is at most I 5 % of Plan
19 PARAMETERIZING THE RISK APPETITE STATEMENTS Some parameters are determined using a quantitative, mostly objective, approach while others may be more subjective Consider the existing risk profile and Management/Board behavior and preferences as expressed explicitly or implied by past behavior Leverage risk identification process (inventories, RCSA) with a focus on scenario modeling and associated probability/impact estimates When possible, tie parameters in the risk appetite statements to financial Plan other established business processes
20 III: Parameterization and Cascading to LOBs A foreign policy aimed at the achievement of total security is the one thing I can think of that is entirely capable of bringing this country to a point where it will have no security at all. -George F. Kennan
21 THE COMPANY S USE OF THE PLAN PROCESS IN SETTING EARNINGS RISK APPETITE Recall the earnings appetite statement: We are x% confident that Plan earnings for the Company will not be missed by more than 15% Management and the Board are hoping to define x as 90% We require that LOB forecasts have a degree of confidence. For each LOB, denoted LOB 1, LOB 2, the respective (dollar) earnings forecasts P 1, P 2, are such that LOB x is 95% confident that it will not miss its Plan forecast by more than M% of P x We back into the value for M through an iterative process
22 THE COMPANY S USE OF THE PLAN PROCESS IN SETTING EARNINGS RISK APPETITE (CONT D) The Company tests a value of M = 15% but model simulation, capturing correlation, shows this tolerance at the LOBs only leads to the enterprise level statement We are 86% confident that the Plan earnings for the Company will not be missed by more than 15% To bump up the 86% confidence to the desired 90% confidence we must tighten the earnings tolerance in each LOB. We gradually try smaller values of M such as 14%, 13%, etc. until we find what value gives the desired confidence statement at the enterprise level
23 THE COMPANY S USE OF THE PLAN PROCESS IN SETTING EARNINGS RISK APPETITE (CONT D) The Company eventually finds that 12% will produce the desired enterprise statement. However, it is necessary for one LOB to reduce its Plan forecast so that it can commit to its earnings confidence statement This revision in the Plan forecast illustrates the iterative nature of the Plan/limit setting process. The fact that the limit setting is embedded in the Plan process creates a strong link between strategic planning and ERM while increasing buy-in The Company has therefore determined the value for M as 12% and we have: If: Each LOB is 95% confident that it will not miss its own Plan earnings by more than 12% Then: We are 90% confident that Plan earnings for the Company will not be missed by more than 15%
24 OTHER PARAMETERIZATION The risk model, complete with equity modeling, can then be used to translate the LOB limits for earnings into LOB limits for ROE. The model is then used to determine what statement is implied at the enterprise level and allows for the determination of y in the ROE risk appetite statement (enterprise-level) The finalized Plan, current risk inventory, and the model allow the parameter z, in franchise value risk appetite statement, to be determined Strategy discussion and the Plan process lead to revisions to the risk inventory, which suggest the following parameters are attainable for the taxonomy-based risk appetite statements: I 1 = 6%, I 2 = 4%, I 3 = 2.5%, I 4 = 2%, & I 5 = 1.5% The above supports the (enterprise-level) earnings risk appetite statement
25 OBSERVATIONS The risk appetite statements relating to capital and franchise value were not cascaded but ERM tools and processes at LOBs can support these statements The Company employed both top-down and bottom-up methods Cascading does not necessitate a precise mathematical linkage in all cases Tying the risk appetite framework to the Plan process leads to an ERM- Strategy linkage and helps operationalize the concepts
26 EXAMPLES OF RISK LIMITS AT LINE LEVEL LOB limits help ensure the (enterprise level) goals described by the risk appetite statements Liquidity limits require liquid assets at the LOB to be sufficient to cover L% of the next 6 months of expected cash outflows FX limits describe what percent of invested assets must be in the local currency Operational risk limits describe a tolerance for actual or estimated frequency and impact of BC/DR, breach etc. events
27 EXAMPLES OF RISK LIMITS AT LINE LEVEL (CONT D) Business continuity limits via enterprise-wide scoring system overseen by the ERM function Portfolio risk limits provide duration corridors, based on ALM studies for the product lines, and also relate to asset allocations, issuer exposures, and average credit rating Counterparty credit exposures: limits at apply at both LOB and the enterprise levels Loss ratio, expense ratio, sales, & capital level vs Plan are measured quarterly & include a mixed actual/forecast refresh
28 EXAMPLES OF RISK LIMITS AT LINE LEVEL (CONT D) The risk scenarios modeled as part of the recurring ERM processes are critical for the RAF (and ERM in general) At each LOB risk scenarios are examined to determine those with probability at least 10% with the highest impacts Judgement and quantitative modeling help to then set LOB limits to help support the risk appetite statements related to key metrics and to the taxonomy classes
29 IV: Measurement and Monitoring Human beings, who are almost unique in having the ability to learn from the experience of others, are also remarkable for their apparent disinclination to do so. -Douglas Adams
30 RISK PROFILE VERSUS LIMITS Recall the Company s axiom regarding limits: There exists a monitoring and reporting structure to measure actual exposures against the system of limits and tolerances at both the business unit and enterprise levels, detects/reports breaches, and triggers appropriate remediation The ERM function oversees this important aspect of the RAF in conjunction with other risk identification and risk quantification processes A regular cadence is important but ad hoc measurement may be necessary when significant events occur which change or may change the Company s risk profile
31 MEASURING RISK EXPOSURE / LIMIT COMPLIANCE On at least a quarterly basis, the enterprise risk inventory is updated and the following risks and metrics are tracked, measured or assessed: 1. LOB level earnings to date and any shortfalls versus the LOB Plan forecasts 2. Achieved ROEs to date and any shortfalls versus the LOB Plan forecasts 3. The enterprise values for (1) and (2)
32 MEASURING RISK EXPOSURE / LIMIT COMPLIANCE (CONT D) 4. Projections reflecting (1) - (3) for the Plan time horizon and updated risks to that reforecast (reflected in the risk inventory) 5. The enterprise risk inventory and risk model are used to check a) the aggregate capital and risk buffer needs, and b) the annual probability of a reduction in company value of 10% or more 6. Separately and for each risk type, the risk scenarios with probability of at least 10% are identified and their impacts to LOB and enterprise earnings are estimated 7. Customized for each LOB, a) key risk indicators (KRIs) and key performance indicators (KPIs) relating to the key metrics, and b) KRIs relating to specific subclasses of the taxonomy categories.
33 EXPOSURE RATINGS The ERM function works with Company management and SMEs define a system of traffic light indicators mapping the prior slide s observed values (1-7) to Green: the risk level is acceptable and regular monitoring continues (no special action required) Amber: the risk may be at a level that is not acceptable and may require remediation; escalation (formal/documented reporting of the situation) is required to the ERM Committee (ERMC), who will make a formal recommendation for corrective action, to restore to Green rating, or possibly defer a decision regarding action during a period of continued monitoring Red: the risk has exceeded the allowable tolerance or limit, and escalation to the ERMC, Management, and/or the Board is required. Root cause analysis, describing the origin of the breach, is submitted by the relevant business and a path toward remediation, including time-frame, is set forth by the ERMC
34 V: Review, Evolution, and Parting Thoughts By definition, risk-takers often fail. So do morons. In practice it's difficult to sort them out. -Scott Adams
35 REVIEW OF THE RAF An organization is rarely static and the RAF must evolve with material changes in a company s risk appetite, risk strategy or risk profile Management and the Board should revisit the framework at least annually but when ever there is a significant change as mentioned above Examples of potential RAF review triggers (not exhaustive!) New product line proposal Potential acquisition or divestiture Reforecast indicates large deviation from Plan (in either direction!) Significant growth or expansion into new geographies Change in strategy or regulatory environment
36 REPEAT OFFENDERS If a particular limit is often breached or a specific LOB (or person!) leads to many breaches then action is needed Revisit and potentially revise strategy Consider revising the limit, adding additional controls, or mitigations Consider changing the traffic light indicators to provide earlier and more sensitive warnings Determine if the breaching element should be reigned in or removed
37 PARTING THOUGHTS ERM in general, and limit/tolerance reporting in particular, is about risk and this implies future events must be the primary focus. Event databases are important but ERM must detect and communicate exposure to future events Leading vs. Lagging: a RAF should make extensive use of risk identification and quantification processes so it can function, in part, as an early warning system rather than merely pointing to recent downside events Caveat: RAFs are given so much attention people may mistakenly view them as synonymous with ERM! A RAF, while only one component of a complete ERM framework, offers a chance for a clear link with strategy and can enable a company to live and breathe its risk-reward vision.
38 REFERENCES Establishing and Embedding Risk Appetite: Practitioners View from the CRO Forum and the North American CRO Council 3. Risk Appetite: An Axiomatic Approach in the Joint Risk Management Section, March (
39
40
41
42
43
44
Risk 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 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 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 informationSession 5: Evolution of ORSA in the US. Moderator: Michael Anthony McComis Jr. MAAA,FCAS
Session 5: Evolution of ORSA in the US Moderator: Michael Anthony McComis Jr. MAAA,FCAS Presenters: S Douglas Caldwell FSA,MAAA,CERA Chad R Runchey FSA,MAAA Elisabetta Russo MAAA SOA Antitrust Disclaimer
More informationBERGRIVIER MUNICIPALITY. Risk Management Risk Appetite Framework
BERGRIVIER MUNICIPALITY Risk Management Risk Appetite Framework APRIL 2018 1 Document review and approval Revision history Version Author Date reviewed 1 2 3 4 5 This document has been reviewed by Version
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 informationUS Life Insurer Stress Testing
US Life Insurer Stress Testing Presentation to the Office of Financial Research June 12, 2015 Nancy Bennett, MAAA, FSA, CERA John MacBain, MAAA, FSA Tom Campbell, MAAA, FSA, CERA May not be reproduced
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 informationRisk Appetite: Survey Results. March 2015
Risk Appetite: Survey Results March 2015 Full Members: Aegon, Allianz, Aviva, AXA, Achmea, Ageas, Generali, Groupama, Hannover Re, ING, Munich Re, Prudential, Swiss Re, Zurich Financial Services Associate
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 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 informationRisk Appetite. What is risk appetite?
Risk Appetite Presented by Mike Claffey 30 March 2011 What is risk appetite? Risk appetite is the degree of risk that an organisation is willing to accept in order to achieve its objectives, both in terms
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 Survey Current state of the Insurance Industry
Risk Appetite Survey Current state of the Insurance Industry Deloitte Belgium and The Netherlands Financial Services Industry The survey was conducted during July 2013 till December 2013 Introduction The
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 informationGUIDELINE ON ENTERPRISE RISK MANAGEMENT
GUIDELINE ON ENTERPRISE RISK MANAGEMENT Insurance Authority Table of Contents Page 1. Introduction 1 2. Application 2 3. Overview of Enterprise Risk Management (ERM) Framework and 4 General Requirements
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 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 informationEnhancing Our Risk Appetite Framework. A Case Study
Enhancing Our Risk Appetite Framework A Case Study Desired Outcomes 1. An approach to developing a risk appetite framework and risk appetite statement. 2. Understanding how a risk appetite framework can
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 informationEnterprise Risk Management
Enterprise Risk Management Southeastern Actuaries Conference Rebecca Scotchie June 2011 ERM is 2 1 Agenda What is ERM? Why is risk management important? ERM maturity model/evolution of ERM ERM Framework
More informationERM Sample Flashcards
ERM Sample Flashcards You have downloaded a sample of our ERM flashcards. The flashcards are designed to help you memorize key material for the SOA s ERM exam. The flashcards are in a Q&A format that is
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 informationAcademy Presentation to NAIC ORSA Implementation (E) Subgroup
Academy Presentation to NAIC ORSA Implementation (E) Subgroup Tricia Matson, MAAA, FSA Chairperson, Enterprise Risk Management (ERM) and Own Risk and Solvency Assessment (ORSA) Committee August 10, 2016
More informationSession 2. Leveraging Predictive Analytics for ERM
SOA Predictive Analytics Seminar Hong Kong 29 Aug. 2018 Hong Kong Session 2 Leveraging Predictive Analytics for ERM Janice Wang, ASA, CERA David Wang, FSA, FIA, MAAA Leveraging Predictive Analytics in
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 informationERM/ORSA Training Thai General Insurance Association (TGIA)
ERM/ORSA Training Thai General Insurance Association (TGIA) 10 October 2017 Agenda Time Topics 8.30-9.00 Registration ORSA for Non-life Insurance Top 10 global business risk in 2017 Weakness and past failures
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 informationEnterprise Risk Management How much risk do you want to take? Mark Lim Risk Consulting and Software Towers Watson
Enterprise Risk Management How much risk do you want to take? Mark Lim Risk Consulting and Software Towers Watson 1 Agenda 1 Introduction 2 Developing an ERM framework 3 Defining and integrating Risk Appetite
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 informationTD BANK INTERNATIONAL S.A.
TD BANK INTERNATIONAL S.A. Pillar 3 Disclosures Year Ended October 31, 2013 1 Contents 1. Overview... 3 1.1 Purpose...3 1.2 Frequency and Location...3 2. Governance and Risk Management Framework... 4 2.1
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 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 informationORSA An International Development
ORSA An International Development 25.02.14 Agenda What is an ORSA? Global reach Comparison of requirements Common challenges Potential solutions Origin of ORSA FSA ICAS Solvency II IAIS ICP16 What is an
More informationRe: Comments on ORSA Guidance in the Financial Analysis and Financial Condition Examiners Handbooks
May 16, 2014 Mr. Jim Hattaway, Co-Chair Mr. Doug Slape, Co-Chair Risk-Focused Surveillance (E) Working Group National Association of Insurance Commissioners Via email: c/o Becky Meyer (bmeyer@naic.org)
More informationSolvency II Detailed guidance notes for dry run process. March 2010
Solvency II Detailed guidance notes for dry run process March 2010 Introduction The successful implementation of Solvency II at Lloyd s is critical to maintain the competitive position and capital advantages
More informationThe Components of a Sound Emerging Risk Management Framework
North American CRO Council The Components of a Sound Emerging Risk Management Framework December 6, 2012 2012 North American CRO Council Incorporated chairperson@crocouncil.org North American CRO Council
More informationPreparing for an Own Risk & Solvency Assessment
www.pwc.com Preparing for an Own Risk & Solvency Assessment March 2013 Brian Paton Director, Insurance Risk and Capital Practice brian.paton@us.pwc.com Contents 1. ORSA challenges 2. ORSA readiness and
More informationModel Governance: Is YOUR Company There Yet? Past, Present and Future of Model Governance. Moderator: Ronald J. Harasym, FSA, CERA, FCIA, MAAA
Model Governance: Is YOUR Company There Yet? Past, Present and Future of Model Governance Moderator: Ronald J. Harasym, FSA, CERA,, FCIA, MAAA Presenters: Dave Czernicki, FSA, MAAA Ronald J. Harasym, FSA,
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 informationERM, the New Regulatory Requirements and Quantitative Analyses
ERM, the New Regulatory Requirements and Quantitative Analyses Presenters Lisa Cosentino, Managing Director, SMART DEVINE Kim Piersol, Consulting Actuary, Huggins Actuarial Services, Inc. 2 Objectives
More informationArticle from: Risks & Rewards. August 2014 Issue 64
Article from: Risks & Rewards August 2014 Issue 64 ALM TRANSFORMATION By Eric L. Clapprood, Jeffrey R. Lortie and Kathryn M. Nelson In a world of uncertainty, there are consistently two sure things consultants
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 informationAFERM Best Practices: Guideposts, Risk Registers and a Maturity Model
AFERM Best Practices: Guideposts, Risk Registers and a Maturity Model G.Edward DeSeve, Senior Advisor September, 2014 Oliver Wyman Introduction Guide Posts- As governments design ERM programs, they must
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 informationSession 3B: Stress Testing from Macro-environment, to Scenario to Impacts and Decision. Moderator: Dariush A. Akhtari, FSA, MAAA, FCIA
Session 3B: Stress Testing from Macro-environment, to Scenario to Impacts and Decision Moderator: Dariush A. Akhtari, FSA, MAAA, FCIA Presenters: Ricky Power David Wicklund, FSA SOA Antitrust Disclaimer
More informationThe ORSA opportunity:
The ORSA opportunity: Compliance and business value 12 March 2014 Today s agenda Background and regulatory update ORSA overview Industry perspectives Achieving long-term business value Page 2 Today s agenda
More informationECB Guide to the internal liquidity adequacy assessment process (ILAAP)
ECB Guide to the internal liquidity adequacy assessment process (ILAAP) March 2018 Contents 1 Introduction 2 1.1 Purpose 3 1.2 Scope and proportionality 3 2 Principles 5 Principle 1 The management body
More informationGuidance Note. Securitization. March Ce document est aussi disponible en français. Revised in October 2018
Guidance Note Securitization March 2018 Revised in October 2018 Ce document est aussi disponible en français. Applicability The Guidance Note: Securitization (Guidance Note) is for use by all credit unions
More informationHow to review an ORSA
How to review an ORSA Patrick Kelliher FIA CERA, Actuarial and Risk Consulting Network Ltd. Done properly, the Own Risk and Solvency Assessment (ORSA) can be a key tool for insurers to understand the evolution
More informationOverview and context
Michael Eves Overview and context Why Are We Talking About This Now? One facet of a long-term reaction to the financial crisis by many stakeholders: Increasing knowledge of models Decreasing confidence
More informationAmex Bank of Canada. Basel III Pillar III Disclosures December 31, AXP Internal Page 1 of 15
December 31, 2013 AXP Internal Page 1 of 15 Table of Contents 1 Scope of application 3 2 Capital structure and adequacy 4 3 Credit risk management 6 4 Asset liability management 11 Structural interest
More informationSession 7 Evolution of ERM Across Industries An ERM Practitioner s Perspective. Danielle Harrison, Chief Risk Officer, The Co-operators Group
Session 7 Evolution of ERM Across Industries An ERM Practitioner s Perspective Danielle Harrison, Chief Risk Officer, The Co-operators Group Banking and Insurance Supervision BCBS (Basel Committee on Banking
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 informationPresentation by: Nasumba Kizito Kwatukha CPA,CIA, CISA,CFE,CISSP,CRMA,CISM,IIK 6 th JULY 2017
ENTERPRISE RISK MANAGEMENT SEMINAR Enterprise Risk Management in case of Financial Institutions Presentation by: Nasumba Kizito Kwatukha CPA,CIA, CISA,CFE,CISSP,CRMA,CISM,IIK 6 th JULY 2017 Uphold public
More informationA.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 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 informationRolling Up Operational Risk
Rolling Up Operational Risk SHARI BREITEN Director, Operational Risk September 17, 2015 Historical Perspective Goals & Objectives Industry Challenges Solutions HISTORICAL PERSPECTIVE: Regulatory Environment
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 informationSession 105 WS, Economic Capital Management for ORSA and Beyond. Moderator/Presenter: Manchiu Chan, FSA, MAAA
Session 105 WS, Economic Capital Management for ORSA and Beyond Moderator/Presenter: Manchiu Chan, FSA, MAAA Presenters: Matthew Kramer, FSA, CERA, MAAA Christopher M. Suchar, MAAA, FCAS Economic Capital
More informationStrategic Risk Management and Balance Sheet Management under the new regulatory environment
Strategic Risk Management and Balance Sheet Management under the new regulatory environment Vishal Kapoor Regional Practice Lead (APAC) Balance Sheet Management, Moody s Analytics 1 Introduction to Moody
More informationCertified Enterprise Risk Professional (CERP) Test Content Outline
Certified Enterprise Risk Professional (CERP) Test Content Outline SECTION 1: RISK GOVERNANCE Domain 1: Board and Senior Management Oversight (8%) Task 1: Provide relevant, timely, and accurate information
More informationThe Central Bank of Ireland Risk Appetite: A Discussion Paper
CONTRIBUTION FROM THE CREDIT UNION DEVELOPMENT ASSOCIATION IN RESPONSE TO The Central Bank of Ireland Risk Appetite: A Discussion Paper 1 st September 2014 Introduction CUDA (Credit Union Development Association)
More informationSession 026 IF - Model Risk Management. Moderator: Yimin Yang. Presenters: George Alvites Charlie Anderson, Ph.D. Gang Ma, FSA
Session 026 IF - Model Risk Management Moderator: Yimin Yang Presenters: George Alvites Charlie Anderson, Ph.D. Gang Ma, FSA SOA Antitrust Compliance Guidelines SOA Presentation Disclaimer Model Risk Management
More informationSession 70 PD, Model Efficiency - Part II. Moderator: Anthony Dardis, FSA, CERA, FIA, MAAA
Session 70 PD, Model Efficiency - Part II Moderator: Anthony Dardis, FSA, CERA, FIA, MAAA Presenters: Anthony Dardis, FSA, CERA, FIA, MAAA Ronald J. Harasym, FSA, CERA, FCIA, MAAA Andrew Ching Ng, FSA,
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 informationInsurance regulation and operational risk
Insurance regulation and operational risk John Thirlwell Non-executive Director, Novae Syndicates Limited London, 7 June 2006 What do we mean by operational risk? The operational risk framework and the
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 informationDEVELOPING THE RISK APPETITE FRAMEWORK OF A LIFE INSURANCE BUSINESS
DEVELOPING THE RISK APPETITE FRAMEWORK OF A LIFE INSURANCE BUSINESS Paul Caputo, Joshua Corrigan, David Creaven and Meera Sardana (Life Risk Appetite Working Party) Working Party Members David Creaven,
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 informationEmbedding Stress Testing as Part of an Integrated Risk Management Framework
Life conference and exhibition 2011 Alastair Clarkson and David Hare Embedding Stress Testing as Part of an Integrated Risk Management Framework 20-22 November 2011 2010 The Actuarial Profession www.actuaries.org.uk
More informationEconomic Capital: Recent Market Trends and Best Practices for Implementation
1 Economic Capital: Recent Market Trends and Best Practices for Implementation 7-11 September 2009 Hubert Mueller 2 Overview Recent Market Trends Implementation Issues Economic Capital (EC) Aggregation
More informationModerator: Kevin M Madigan MAAA,ACAS,CERA. Presenters: Barry A Franklin MAAA,FCAS,CERA Kevin M Madigan MAAA,ACAS,CERA
Session 26: The Role of a Model Risk Management Framework in P&C Insurers SOA Antitrust Disclaimer SOA Presentation Disclaimer Moderator: Kevin M Madigan MAAA,ACAS,CERA Presenters: Barry A Franklin MAAA,FCAS,CERA
More informationERM Benchmark Survey Report A report on PACICC's third ERM benchmarking survey
Property and Casualty Insurance Compensation Corporation Société d indemnisation en matière d assurances IARD ERM Benchmark Survey Report A report on PACICC's third ERM benchmarking survey August 2015
More informationBusiness Continuity Management and ERM
Business Continuity Management and ERM Partnership for Emergency Planning Kansas City Marshall Toburen GRC Strategist ERM, ORM, 3PM RSA A division of EMC 2 June 18, 2014 1 Agenda Intro State of ERM Today
More informationIAIS: Enterprise Risk Management for Capital Adequacy & Solvency Purposes. George Brady. IAIS Deputy Secretary General
IAIS: Enterprise Risk Management for Capital Adequacy & Solvency Purposes George Brady IAIS Deputy Secretary General Table of Contents 1. Introduction 2. Governance and an Enterprise Risk Management (ERM)
More informationCOMMUNIQUE. Page 1 of 13
COMMUNIQUE 16-COM-001 Feb. 1, 2016 Release of Liquidity Risk Management Guiding Principles The Credit Union Prudential Supervisors Association (CUPSA) has released guiding principles for Liquidity Risk
More informationModerator: Eric L Clapprood FSA,CERA. Presenters: Dwayne Allen Husbands FSA,MAAA Youyou Tao FSA,CERA
Session 3: How to Effectively Embed Stress Testing into a Risk Management Framework to Support Management Action SOA Antitrust Disclaimer SOA Presentation Disclaimer Moderator: Eric L Clapprood FSA,CERA
More informationRisk Architecture: Agenda. Leon Bloom, Partner, Deloitte & Touche LLP
Risk Architecture: Alignment of Investor Objectives and Strategic and Business Objectives and Risk Appetite and Limits Leon Bloom, Partner, Deloitte & Touche LLP lebloom@deloitte.ca Agenda Alignment of
More informationNAIC OWN RISK AND SOLVENCY ASSESSMENT (ORSA) GUIDANCE MANUAL
NAIC OWN RISK AND SOLVENCY ASSESSMENT (ORSA) GUIDANCE MANUAL As of December 2017 The NAIC is the authoritative source for insurance industry information. Our expert solutions support the efforts of regulators,
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 informationThe Challenges of Solvency II
Solvency II The Challenges of Solvency II Gain-Line & Solvency II Solvency II is the biggest ever exercise in bringing together insurers and re-insurers under one regulatory regime. Solvency II is a set
More informationGuideline. Earthquake Exposure Sound Practices. I. Purpose and Scope. No: B-9 Date: February 2013
Guideline Subject: No: B-9 Date: February 2013 I. Purpose and Scope Catastrophic losses from exposure to earthquakes may pose a significant threat to the financial wellbeing of many Property & Casualty
More informationRisk Management. Policy No. 14. Document uncontrolled when printed DOCUMENT CONTROL. SSAA Vic
Document uncontrolled when printed Policy No. 14 Risk Management DOCUMENT CONTROL Version: Date approved by Board: On behalf of Board: Jack Wegman 17 March 2015 26 March 2015 Denis Moroney President Next
More informationThe Country Risk Manager as Chief Risk Officer for the Government. Swiss Re, 3 June 2014
The Country Risk Manager as Chief Risk Officer for the Government Swiss Re, 3 June 2014 Agenda Risk management fundamentals across private and public sectors Swiss Re's risk management process as an example
More informationORSA: A relevant part of the governance system within Solvency II
ORSA: A relevant part of the governance system within Solvency II Prof. Dr. Martin Balleer, Georg-August-Universität Göttingen Germany Faculty of Economics Belgrade University 18th May 2016, Belgrade Solvency
More informationRisk Report. 42 Introduction 43 Risk and Capital Overview 43 Key Risk Metrics 44 Overall Risk Assessment 44 Risk Profile
Risk Report 42 Introduction 43 Risk and Capital Overview 43 Key Risk Metrics 44 Overall Risk Assessment 44 Risk Profile 46 Risk and Capital Framework 46 Risk Management Principles 47 Risk Governance 50
More informationSolvency II: Implementation Challenges & Experiences Learned
Solvency II: Implementation Challenges & Experiences Learned Appointed Actuary Symposium Actuarial Society of Hong Kong (ASHK) Jonathan Zhao - Actuarial Services Practice Leader, Asia Pacific 3 November
More informationINSURANCE CORE PRINCIPLES, STANDARDS, GUIDANCE AND ASSESSMENT METHODOLOGY
INSURANCE CORE PRINCIPLES, STANDARDS, GUIDANCE AND ASSESSMENT METHODOLOGY Revised ICP 8 and the additional ComFrame material in ICP 8 for public consultation (redline version) This public consultation
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 informationSOA Risk Management Task Force
SOA Risk Management Task Force Update - Session 25 May, 2002 Dave Ingram Hubert Mueller Jim Reiskytl Darrin Zimmerman Risk Management Task Force Update Agenda Risk Management Section Formation CAS/SOA
More informationSolvency Assessment and Management: Stress Testing Task Group Discussion Document 96 (v 3) General Stress Testing Guidance for Insurance Companies
Solvency Assessment and Management: Stress Testing Task Group Discussion Document 96 (v 3) General Stress Testing Guidance for Insurance Companies 1 INTRODUCTION AND PURPOSE The business of insurance is
More informationRisk Management. Seminar June Compiled by: Raaghieb Najjaar, Yaeesh Yasseen & Rashied Small
Risk Management Seminar June 2017 Compiled by: Raaghieb Najjaar, Yaeesh Yasseen & Rashied Small Defining Risk Risk reflects the chance that the actual event may be different than the planned / expected
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 informationWorking through Risk Appetite
28 th National Risk Management Training Conference Working through Risk Appetite Marilyn Smith Head U.S. Policy & Governance BMO Financial Corp./BMO Harris Bank Fiduciary Governance April 30 2013 Working
More informationBasics of Liquidity Risk Management For Community Financial Institutions under $3 Billion in Assets
Basics of Liquidity Risk Management For Community Financial Institutions under $3 Billion in Assets 9/5/2013 By: Lawrence P. Poppert III, CPA Lawrence P. Poppert, III CPA Managing Principal Tel: 215 880-8261
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 informationInsights. NAIC s ORSA. A Broader Approach to Regulation. NAIC S ORSA Part of a Global Shift to Regulatory Modernization
Insights June 2011 NAIC s ORSA A Broader Approach to Regulation Broad regulatory changes are on the horizon for U.S. insurers. The National Association of Insurance Commissioners (NAIC s) Solvency Modernization
More informationRisk Appetite Frameworks for Corporates Do you know what is on your plate?
Risk Appetite Frameworks for Corporates Do you know what is on your plate? Brochure / report title goes here Section title goes here Contents Are risk appetite frameworks really relevant to corporates?
More information