Enterprise Risk Management (ERM)

Solvency II regulations require organisations to establish risk management systems and controls to result in a comprehensive and timely ERM framework.

We assist our clients with risk identification and management efforts throughout the enterprise through a rigorous and focussed process that typically runs in twelve-monthly cycles to support the risk and/or audit committee as follows:

• A formal process to ensure identification of key risks;
  
• Assimilation of the identified risks in order to [a] prioritise them, [b] identify the required management actions to mitigate those risks, [c] agree the primary responsible person(s) for each action and [d] decide how execution will be monitored;
  
• Regular, structured, formal interaction with your team to ensure proper management focus and a suitable degree of governance of the ERM process;
  
• Quarterly documentation that is ideally suited as input to your audit and/or risk committee.
  

In the specific case of a life insurer, the ERM process exists alongside the role of the statutory actuary. Although the identification of risk areas is an important part of any valuation report (i.e. a normal part of the actuarial control cycle), the main focus therein usually remains the presentation and discussion of valuation results. Typically, a valuation report will list a number of examples of occurrences which could lead to provision insufficiency and comment on whether it is believed that the current sufficiency level is adequate to withstand such possible future adverse events. As such we have found that that the depth of risk analysis contained in a valuation report is often too limited for enterprise risk management process purposes, thus allowing us to engage with life insurance clients on the ERM front even if we are not the appointed statutory actuaries.

Our assistance to clients in the context of Solvency II is closely related to ERM. Click here if you would like to view more information.