ERM for insurance companies – adding the investor's point of view

Hitchcox, A. N.; Klumpes, Paul J. M.; McGaughey, K. W.; Smith, Andrew; Taverner, N. H.

doi:10.1017/s1357321711000122

Cited by 5 publications

(5 citation statements)

References 3 publications

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“…We do not wish to claim particular novelty for the ERM techniques and disciplines described below. They correspond in broad terms with current best practice in this area as articulated in, say: > Deighton et al (2009), Hitchcox et al (2010) or IAA (2009) which are primarily insurance orientated; > Orros & Smith (2010) which provides a health insurance perspective;…”

Section: Main Conclusionmentioning

confidence: 86%

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Entity-wide risk management for pension funds

Kemp¹,

Patel²

2012

Br. Actuar. J.

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This paper explores the application of ERM-style techniques to pension funds. It uses the term ‘entity-wide risk management’ rather than ‘enterprise risk management’, even though both have the same acronym (‘ERM’), because many pension funds do not view themselves as business ‘enterprises’ as such. Some of the techniques that business enterprises have for managing risk (e.g. raising new capital from shareholders or branching into new business areas if existing ones have unattractive risk-reward characteristics) may not be open to many pension funds. The paper argues that the holistic approach to risk management (and governance) that is a hallmark of ERM is as appropriate to pension funds as it is to any other type of entity. This is the case whether the fund is defined benefit or defined contribution in nature, or a hybrid. It is also the case whether the ‘entity’ is deemed to be the fund itself, the sponsor or the two combined. Indeed, there are aspects of pension arrangements, such as the relationship between the fund and its sponsor, that lend added impetus to the use of ERM-style techniques in practical pension fund management.

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Section: Main Conclusionmentioning

confidence: 86%

“…(2009), Hitchcox et al . (2010) or IAA (2009) which are primarily insurance orientated;Orros & Smith (2010) which provides a health insurance perspective;Lam (2003) which focuses on ERM in a financial services context; orChapman (2006) which considers the more general corporate and government environment.…”

Section: Introductionmentioning

confidence: 99%

Entity-wide risk management for pension funds

Kemp¹,

Patel²

2012

Br. Actuar. J.

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“…Il soutiendra donc une stratégie de prise de risque ambitieuse en vue d'augmenter le rendement de son investissement, tout en étant maîtrisée. Par ailleurs, il aura également une appréhension au-delà d'un niveau de risque maximal par peur de perdre son capital en cas de réalisation de ce risque comme cela est présenté par Hitchcox et al (2010).…”

Section: L'investisseurunclassified

Appétence au risque : intégration au pilotage d’une société d’assurance

Thérond,

Valade

2023

agr

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La Directive Solvabilité 2 adoptée définitivement en novembre 2009 au sein de l’Union européenne modifie profondément les règles prudentielles du secteur de l’assurance. Si le premier pilier exige que les assureurs disposent d’un niveau de fonds propres qui leurs permettent de ne pas être en ruine à horizon 1 an avec une probabilité supérieure à 99,5 %, les assureurs devront, au titre du pilier 2, mettre en oeuvre un suivi et un pilotage permanent de leur exposition aux risques au travers de l’ORSA (Own-Risk Solvency Assessment). En particulier, les décisions significatives en termes d’exposition au risque devront être appréciées au regard de leur impact sur l’exigence de capital. Aussi il apparaît opportun pour les assureurs de s’organiser et de mettre en oeuvre une gestion en relation avec l’appétence au risque de la société. Au-delà du seul fait de mesurer l’impact de telle ou telle décision sur l’exposition au risque et l’exigence de fonds propres correspondante, il s’agit d’intégrer cette contrainte et de définir les objectifs de la société pour prendre les décisions optimales. L’objectif de cet article est de présenter la notion d’appétence au risque et d’expliquer en quoi son intégration dans le pilotage de la compagnie constitue un avantage conséquent. Il décrit ensuite les étapes de sa mise en place au travers de la définition des objectifs, des contraintes et de leur déclinaison pour les différents propriétaires de risques.

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“…Risk management in life offices has become more prominent and more formal, a result of a number of factors, including volatility in financial conditions and the growth in use of derivatives (Hitchcox et al , 2011), whereas regulatory pressure has also been important (FSA, 2006). Stochastic modelling and stress tests have been developed as important risk management tools.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Dumbreck (2007) explained that the actuarial profession was devoting much effort to positioning actuaries as the natural choice for senior risk management roles in the financial services industry; actuaries have tools for quantitative risk management but it was recognised that those intending to specialise in enterprise risk management (ERM) would need to understand strategic and operational risk and how to implement ERM processes in a firm. Hitchcox et al (2011) felt there were opportunities for actuaries in insurers’ ERM, especially as regards strategic issues. Deighton et al (2009) thought that actuaries could contribute much to the risk agenda, especially playing a key role in performing the detailed calculations underlying the numerical aspects of certain risks, but they did not have an automatic claim on the CRO role.…”

Section: Literature Reviewmentioning

confidence: 99%

The roles of actuaries in UK life offices: changes and challenges

O’Brien¹,

Gallagher²,

Green³

et al. 2015

Br. Actuar. J.

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We examine the roles of actuaries in UK life offices, along with trends, challenges to and opportunities for actuaries. We carry out an analysis of senior roles in life offices, a questionnaire survey and interviews with relevant senior personnel. We find that actuaries occupy many important roles in life offices and are regarded as having good industry knowledge and technical skills, especially in financial modelling. There are fewer executive directors and more non-executive directors of life offices who are actuaries compared with the position in 1990. A higher proportion of reserved roles is outsourced to consultants than was the case in 1990. Only a small number of Actuarial Function Holders are directors. Actuaries are more siloed than was the case in the past, although actuaries are well represented in the finance and risk functions of many offices. Although actuarial work in connection with the preparation for Solvency II will decline, there will be important ongoing requirements for actuaries following Solvency II implementation. We also see opportunities for actuaries in four areas: in risk management, in financial analysis and management based on Solvency II and international financial reporting standards, in connection with “big data”, and in product development and the customer proposition. There are implications for the examination syllabus, continuing professional development and research.

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ERM for insurance companies – adding the investor's point of view

Cited by 5 publications

References 3 publications

Entity-wide risk management for pension funds

Entity-wide risk management for pension funds

Appétence au risque : intégration au pilotage d’une société d’assurance

The roles of actuaries in UK life offices: changes and challenges

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