May 11, 2010 0
The Canadian Institute of Actuaries (“CIA”) has released a second booklet in its ERM series. The first was titled, “Enterprise Risk Management: Should you be doing it?” The new booklet is titled, “Enterprise Risk Management: Who is doing it?”
You can get the copies in English and French here.
“Enterprise Risk Management: Who is doing it?” English version
“Enterprise Risk Management: Who is doing it?” French version
Feb 6, 2010 0
By Jean-Yves Rioux, FCIA
In the summer of 2009, the Enterprise Risk Management (ERM) Applications Committee of the Canadian Institute of Actuaries (CIA) asked members, who listed ERM as their primary or secondary area of practice, to participate in a Strengths, Weakness, Opportunities and Threats (SWOT) survey about actuaries and ERM. The results of the survey were compiled to form a consensus view related to the following:
Twenty-three percent of the 103 members who were solicited to participate responded to our survey. The members of the ERM Applications Committee reviewed the results and are confident that the responses can be used to develop promotional material for the profession, and to make recommendations on potential areas of development for actuaries.
The following four, open-ended questions were asked of those surveyed:
Nov 5, 2009 0
A 2008 White Paper, published by the CFO Magazine and written by Frank Edelblut, outlined the 7 Deadly Sins of ERM – Lack of a Clear Vision, Building Unnecessary Organization, Function and Process, Lack of Support from Leaders, Bottom-up Approach, Risk Confusion, Overly Complex Risk Assessment and Making ERM the Endgame. While most if not all of these sins sadly still take place within the enterprise, a whole year has passed since the publication and their amount is not decreasing, if not the opposite.
In true actuarial fashion we extended the upper limit on the sins to N and relied on the wisdom of the crowds, in particular on the INARM listserv and the LinkedIn Group. What followed is presented below.
ERM does not need introduction, although perhaps we flatter ourselves. While the abovementioned white paper credits the beginning of ERM to the Committee of Sponsoring Organizations (COSO) – Enterprise Risk Management – Integrated Framework, brought forward in 2004, or perhaps even further back to 1970’s, people are still unaware of the necessity of its implementation. Moreover, and sadly at that, the exposure of the actuaries as the prime candidates for the role is something to be desired. Just ask anyone in Europe what a CERA (Chartered Enterprise Risk Analyst) is!
Luckily, the Society of Actuaries (SOA) in the States, along with a slew of other bodies, is doing an excellent job at promoting CERA and the brand of actuaries as the best people for the job of a risk manager. There is even talk of 16 actuarial bodies working on agreement in principle regarding worldwide recognition of the designation, but again, it is too soon to tell.
Yes, the companies out there are implementing ERM, not as many as we would like to see, but it is a great start. However, just to start thinking about it and staff the risk management team is not enough. ERM is a mindset and should be prevalent in the whole institution. Below are some of the things you should not do in your quest to ERM nirvana:
Sep 9, 2009 0
In May 2008, Standard & Poor’s Ratings Services announced its intention to include enterprise risk management (ERM) assessments in ratings of nonfinancial companies (see “Standard & Poor’s To Apply Enterprise Risk Analysis To Corporate Ratings ,” published May 7, 2008, on RatingsDirect). Since the third quarter of last year, our analysts have begun to incorporate specific ERM discussions into their regular meetings with the companies we rate, focusing on risk management culture and strategic risk management as two universally applicable aspects of ERM.
Among other things, we’ve been reviewing risk management structures, the roles of staff responsible for risk management, internal and external communication, and risk management policies and metrics. Our analysts have explored managements’ views of the most consequential risks that their firms face, their likelihood of occurring, how these top risks are identified, monitored, and updated, and the influence of risk sensitivity on liability management and financing decisions.
The complete Progress Report is available erm-update-22-jul-09.
Sep 3, 2009 0
Jawwad Farid is “a self employed Karachiite with a questionable work ethic and a penchant for founding companies that run into trouble”. Nonetheless, he is the author of The Blue Screen of Death and CEO of Alchemy Technologies – one of the largest Enterprise risk and Actuarial firms in Pakistan with a portfolio of several blue chip customers. Jawwad is a Fellow Society of Actuaries, an MBA from Columbia Business School and a Computer Science graduate. During the last 15 years, he has worked as a consultant in North America, the Middle East, Pakistan and United Kingdom with a number of blue chip clients. Jawwad is also the appointed Actuary for State Life Corporation of Pakistan and Dawood Family Takaful Limited. Jawwad’s core areas of expertise include Asset/Risk Management, Investments, Product development, Derivatives, the financial services Middle Office and the Basel II Regulatory Frame work.
In early Spring Mr. Fawad launched Pakistan Risk Review – “a dedicated periodical that quantifies the risk associated with Pakistani securities using a consistent, objective benchmark”. Currently on its third issue the periodical is going strong and picking up momentum. The Editor’s Notes to the Second and Third Issues are worth noting. They have been linked to below, with permission from Jawwad.
Jul 13, 2009 0
The following post is from Dave Ingram:
Dave Sandberg and I will be participating in a couple of workshops this summer to map out priorities and corresponding strategies as challenges and opportunities continue to emerge due to the current economic crisis and the resulting government reactions. We are unofficially asking the INARM group for help with providing some suggestions that we could bring to the discussion of what the actuarial and ERM professions should be doing. We are particularly looking for those famous “outside-the-box” ideas that might not otherwise be considered.
To give you an idea of what we mean by “outside-the-box”, here are some examples:
May 14, 2009 4
This article is written by Max Rudolph, FSA CFA CERA MAAA of Rudolph Financial Consulting, LLC
It has been five years since I published an extensive article in the Risk Management newsletter, and I have periodically written about influenza topics since then. Those articles can all be found at my web site.
In the past month a number of reports have come out about clusters of influenza. All have ties to Mexico, but it shows how quickly students and tourists can carry a virus around the world. Cases have been reported from New Zealand to the United States, and all places in between. What can we learn from these early cases? Is this a repeat of 1918? Will the virus stay active in the southern hemisphere during the summer months of the northern hemisphere?
May 8, 2009 0
In a letter seeking support sent to colleagues in the Senate on April 24 2009, US Senator Charles Schumer outlined five points that his proposed Shareholder Bill of Rights will enforce. They are as follows:
Apr 22, 2009 0
While it is definitely true that paying less for the same amount of risk management is better than paying more, the story “Standouts in risk management honored” in Business Insurance suggests that cost management is the only objective of risk management.
This implies that there is a long way to go before folks are ready to really commit to real risk management. Under a cost approach to risk management, it is quite likely that a firm would decide to self insure any risks where the cost to insure/hedge the risk was thought to be too high. It also argues against identifying new risks that a firm has taken on through new activities or because of changes in regulation because that would increase the cost of risk management.
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