5 new ERM Research Working Parties

The ERM Research & Thought Leadership Committee is currently overseeing the formation of the following 5 new member-led research working parties:-

1.  "Design of the risk function" Working Party:

This research working party will be looking to answer the following questions:-

• How do we define a risk function?
• How large does it need to be to be effective and what skills composition should it have? 
• Who should it be accountable to?
• How should its success be measured and how should its performance be rewarded? 
• What synergies are there between different industries?

The scope of this project will probably benefit from having two work-streams; an academic work-stream and a practitioner work-stream which will run side by side but touch base every month: the academics teaching the practitioners about the theoretical framework they are developing – the practitioners providing case studies / practical example to the academics so they can test that their frameworks hold true in real life.

Who would be best placed to undertake the research:  Mix of practitioners and academics operating in the ‘Risk’ space.

2.  "Resilience" Working Party:

This research working party will seek to identify areas where risk function could/should advocate structures or methods which promote organisational resilience.  Evaluating the cost-benefit of investment in resilience requires a slightly different calculation, which involves considering the possibility that changes in the operating environment cause the organisation to unintentionally find itself in a new paradigm which is suboptimal. 

Who would be best placed to undertake this research:  The topic will generate differences of view so a diverse group including academics and practitioners. 

3.  "Emerging risks" Working Party:

 This research working party will be looking to:

• Define emerging risks, best role for group and identify information sources
• Work towards a methodology of how to assess the significance and likelihood of emerging risks
• Identify the most likely candidates of risks and who they apply to, and
• Consider how the profession should deal with emerging risks.

Who would be best placed to undertake this research:  Actuaries and other professionals, i.e. engineers, medical, computer, economists.

4.  "Risk culture" Working Party:

 This research working party will be looking to help practitioners and policy-makers understand what is meant by risk culture which has traditionally been a vague concept for risk managers to assess and manage. 

Who would be best placed to undertake the research:  Actuaries with an interest in applying Anthropology to the topic of Risk Culture to ensure that the research is grounded in a sound theoretical base and appropriately contextualised for the insurance sector.

5.  "Model risk" Working Party:

 This research working party will look to include two distinct but related work-streams covering:

• Model risk identification:  The main model risk to insurance businesses and the insurance system need to be identified.  Concrete examples will be given of the way in which model error can lead to wrong decisions in capital allocation, pricing, and other business decisions.
• Decision making in the presence of model risk:  A framework for decision making when designing and when using models will be developed, in the presence of model uncertainty.  There will be focus on dealing with contradictory expert opinion and on using information external to the model for validation and sensitivity analyses.

A Chair is required for the first stream,  (Model Risk Identification). The Chair will be an actuary with extensive experience in risk management, ideally across sectors. The Chair’s expertise should be in the ways that models are used in decision making by a variety of stakeholders, rather than statistical risk modelling itself (though additional expertise in that area would of course be welcome).

Who would be best placed to undertake this research:  Insurance practitioners, actuaries, modellers, academics in the areas of insurance and financial risk management, systems theory, and anthropology.   It is envisaged that a research working party will be formed and divided in to two streams as above.  Volunteers are needed for both streams of the project, so applicants should specify which one they are most interested in.

Time Commitment for each of the 5 Working Parties:  Attendance at 8 – 12 meetings per annum and follow up on actions between meetings.  Meetings are held in London and usually last for 2 hours.  Attendance by conference call is possible.

How to get involved:  If you feel you have the relevant skills and experience and would like to offer your support and volunteer to be considered for one or more of these working parties, please contact Debbie Atkins, Head of Volunteer Engagement.  When contacting Debbie, please indicate which working party you would like to volunteer to join and please also give brief details of your relevant experience and your reason for wishing to become involved.  A note of your ARN would also be helpful.    

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