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ORSA-Based ERM Program

How we build Own Risk and Solvency Assessment (ORSA)-based Enterprise Risk Management (ERM) programs for insurers and insurance groups

For insurers and insurance groups subject to the ORSA Model Act # 505, we develop an ORSA-based ERM program that helps drive value and strategy. The program enables the insurer to achieve regulatory compliance as it documents the requisite information needed to comply with ORSA and provides the insurer clear insights into how it should effectively manage and monitor its enterprise-wide risks.

We build the ORSA-based ERM program for any insurer by leveraging the insurer’s existing risk management and enterprise business objectives or goals, conduct an enterprise risk assessment to identify and quantify the insurer’s enterprise-wide risks and generate the appropriate risk responses for each material enterprise-wide risk.

Because insurers subject to the Model Act are required to conduct an own risk and solvency assessment and must file an ORSA Summary Report that must have the following sections—a description of the insurer’s risk management framework, the insurer’s assessment of risk exposures and the insurer’s risk capital and prospective solvency assessment; we develop for an insurer a program that captures and summarizes the insurer’s risk and solvency management approaches. This enables the insurer to satisfy the Act’s own risk and solvency assessment requirement.

As we develop the ORSA-based ERM program, we build into it risk-based performance measurement reports that the insurer would use to file an ORSA Summary Report and meet the ORSA Summary Report filing requirement.

An important requirement of the Model Act is that an insurer put into place a risk governance framework; a structure that the insurer would continuously use to manage its enterprise-wide risks. As such, we create for the insurer a risk governance structure that is made up of a risk committee or equivalent and the following risk management and monitoring tools.

The risk committee would use these reports to administer the insurer’s ERM program.

Our risk governance framework delivers measurable results because the risk reports provide a solid benchmark for the insurer to begin measuring its ERM program’s performance over time. Also, because an ORSA-based ERM is not a one-off event, we upload the risk responses and reports into a risk reporting and management information system to give the insurer the capability to periodically update these responses and reports. This further enhances the insurer’s ability to continuously administer the ERM program.

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