Operational Risk Challenges in Insurance
John Kelly 270004J7VQ firstname.lastname@example.org | | 0 Comments | 213 Visits
With individual countries required to implement Solvency II by October 2012, insurance companies face relatively tight deadlines to comply with a more sophisticated risk-based approach to supervision throughout the EU. One of the largest changes for all firms covered by Solvency II is the ORSA requirement. “The ORSA has a two-fold nature,” according to EC documents. “It is an internal assessment process within the undertaking and is as such embedded in the strategic decisions of the undertaking. It is also a supervisory tool for the regulatory authorities, which must be informed about the results of the undertaking’s ORSA.”
ORM software can provide crucial risk self-assessment capabilities that enable organizations to document and evaluate their risk frameworks, including processes, risks, events, key risk indicators (KRI) and controls. Executives can stay on top of organizational risk activities through dashboards and reports that highlight key risk metrics and policy compliance.
Munich-based Allianz spent much of 2008 and 2009 focused on infrastructure and Pillar I of Solvency II. The company selected OpenPages ORM (Operational Risk Management) for loss data capture, risk self-assessment and quantitative scenario analysis. The operational risk framework involves the introduction of an updated methodology, improved business processes and new IT support systems. The goal is to integrate pragmatic operational risk management techniques in core businesses operations and decision making processes.
Allianz hopes that their efforts for Solvency II will form the basis of a deeper change in terms of building a risk management culture and the ability to generate good business from a risk and return perspective.
To learn how Allianz is managing Operational Risk and Solvency II, read the case study.