INARM

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

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:

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