Actuarial Risk Management Volunteer Opportunity

Actuarial Review of Enterprise Risk Management Practices –

A Working Group formed by The Enterprise and Financial Risks Committee of the IAA has started working on a white paper to be titled: “Actuarial Review of Enterprise Risk Management Practices”.  We are seeking volunteers to assist with writing, editing and research.

This project would set out a systematic process for actuaries to use when evaluating risk management practices.  Actuaries in Australia are now called to certify risk management practices of insurers and that the initial reaction of some actuaries was that they were somewhat unprepared to do that.  This project would produce a document that could be used by actuaries and could be the basis for actuaries to propose to take on a similar role in other parts of the world.  Recent events have shown that otherwise comparable businesses can differ greatly in the effectiveness of their risk management practices. Many of these differences appear to be qualitative in character and centered on management processes. Actuaries can take a role to offer opinion on process quality and on possible avenues for improvement. More specifically, recent events seem likely to increase emphasis on what the supervisory community calls Pillar 2 of prudential supervision – the review of risk and solvency governance. In Solvency II in Europe, a hot topic is the envisaged requirement for an ‘Own Risk and Solvency Assessment’ by firms and many are keen to see actuaries have a significant role in advising on this. The International Association of Insurance Supervisors has taken up the ORSA requirement as an Insurance Core Principle and encourages all regulators to adopt as part of their regulatory structure.  It seems an opportune time to pool knowledge.

The plan is to write the paper over the next six months and to spend another six months on comment & exposure prior to finalization.  If we get enough volunteers the workload for each will be small.   This project is being performed on a wiki which allows many people to contribute from all over the world.  Each volunteer can make as large or as small a contribution as their experience and energy allows.  People with low experience but high energy are welcome as well as people with high experience.

A similar working group recently completed a white paper titled the CARE report.  http://www.actuaries.org/CTTEES_FINRISKS/Documents/CARE_EN.pdf  You can see what the product of this sort of effort looks like.

Further information is available from Mei Dong, or David Ingram

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David Ingram, CERA, FRM, PRM
+1 212 915 8039
(daveingram@optonline.net )

FROM 2009

ERM BOOKS – Ongoing Project – Volunteers still needed

A small amount of development work was been done to create the framework for a global resource for ERM Readings and References.

http://ermbooks.wordpress.com

Volunteers are needed to help to make this into a real resource.  Over 200 books, articles and papers have been identified as possible resources ( http://ermbooks.wordpress.com/lists-of-books/ )

Posts to this website give a one paragraph summary of a resource and identify it within several classification categories.  15 examples of posts with descriptions and categorizations can be found on the site.

Volunteers are needed to (a) identify additional resources and (b) write 1 paragraph descriptions and identify classifications.

If possible, we are hoping that this site will ultimately contain information on the reading materials for all of the global CERA educational programs.  So help from students and/or people who are developing CERA reading lists is solicited.

Participants will be given author access to the ermbooks site.  Registration with wordpress at www.wordpress.com is needed prior to getting that access.

Please contact Dave Ingram if you are interested in helping with this project.

FROM 2008

The Enterprise and Financial Risks Committee of the  IAA is planning on undertaking two projects to produce discussion white papers on actuarial roles in two important areas of ERM,  Risk Evaluation and ERM program evaluation.  Seamus Creedon from the UK is kicking off the second project and David Ingram of the US is starting the first.  We have agreed that Seamus will look for volunteers primarily in Europe and David will look first in North America though we are both open to volunteers from anywhere in the world.
Please contact David or Seamus if you are interested in either of these projects.  We expect these projects to be officially proposed at the end of October at the Cyprus IAA meeting, but if possible, we may try to hold a preliminary meeting of volunteers prior to that.  (If you are volunteering, please do not reply all unless you want your response to go to the entire listserv)
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1.  Comprehensive Actuarial Risk Evaluation (CARE) – this project would develop a white paper that describes a comprehensive evaluation of a risk. By comprehensive, I mean that the analysis would look to quantify risk from numerous perspectives, such as market consistent vs. fundamental value, short term vs. long term, know risks vs. emerging risk elements, frequency risk (earnings volatility) vs. severity risk (solvency); viewed stand-alone and in the context of the full risk portfolio.. The idea for this is that the actuarial profession position ourselves as the risk professionals who would intend to completely evaluate a risk from all points of view. A document of this type would
provide a standard for that thorough review and would provide a systematic description of this comprehensive evaluation that actuaries could use in risk reports to clearly cite what part of the comprehensive evaluation that they did not perform in a particular situation. This report would develop a generic description of this idea and give numerous examples of how this would then be applied for specific risks
that actuaries are commonly called to evaluate.

PROJECT COMPLETED

2.  Actuarial Review of Risk Management Practices (ARRMP) – this project would set out a systematic process for actuaries to use when evaluating risk management practices.  Actuaries in Australia are now called to certify risk management practices of insurers and that the reaction of many actuaries was that they were at the very least unprepared to do that.  This project would produce a document that could be used by Australian actuaries and could be the basis for actuaries to propose to take on a similar role in other parts of the world.  Recent events have shown that otherwise comparable businesses can differ greatly in the effectiveness of their risk management practices. Many of these differences appear to be qualitative in character and centered on management processes. Actuaries should be able to offer opinion on process quality and on possible avenues for improvement. More specifically, recent events seem likely to increase emphasis on what the supervisory community calls Pillar 2 of prudential supervision – the review of risk and solvency governance. In Solvency 2 in Europe, a hot topic is the envisaged requirement for an ‘Own Risk and Solvency Assessment’ by firms and many are keen to see actuaries have a significant role in advising on this. It seems opportune to pool knowledge, drawing in particular on the Australian experience.

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Plan is to get the projects done over a year or so and then expect to spend another six months on comment & exposure prior to finalization.

Expect the projects to go something like this…

1. Form working group

2. Refine project objective

3. Develop outline of report

4. Working group members agree to be drafters, initial reviewers of sections of report.

5. Drafters produce v.1

6. Initial reviewers do major critical review of v.1

7. Drafters & initial reviewers produce v.2

8. V.2 circulated to entire working group. Group comments

9. V.3 produced

10. Review by professional editor (if desired)

11. V.4 produced.

12. V.4 circuated to IAA Enterprise & financial risks cmt.

13. Incorporate cmt comments. End of drafting phase.

At this stage it could be published as a committee report or go through another wider review to be accepted as formal IAA endorsed product.

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David Ingram, CERA, FRM, PRM
Senior Vice President
Willis Re

One World Financial Center, 3rd Floor
200 Liberty Street
New York, NY  10281

+1 212 915 8039
david.ingram@willis.com
(also daveingram@optonline.net )

Seamus Creedon
Consultant, KPMG LLP
8th Floor, One Canada Square
Canary Wharf, London E14 5AG
Telephone: +44 20 7311 5075
Mobile: +44 7808 900 614
e-mail: seamus.creedon@kpmg.co.uk
(also seamus.creedon@ntlworld.com)

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