ERM has many definitions. The generally agreed concept is that ERM is wider than traditional risk management and covers all the risks within an enterprise (or company). Traditional risk management focuses on identifying risks, measuring and monitoring risks and designing strategies to limit losses to agreed limits. ERM recognises that businesses take risks in order to make a profit for their owners and therefore considers the upside of taking risks, and attempts to strike a balance between too much risk and not enough risk compared to the enterprise’s strategic direction. Risk is managed holistically in a fully integrated framework, across all different risk types and the different functions/companies within the organisation.
The call for research
The profession would welcome proposals in the following areas:
- How should firms define and use “risk appetite”, but with the emphasis on the need that outputs should be practically grounded and expressed.
- How should firms identify and assess the hard to define risks – what techniques are available and how do they work in practice? This topic could possibly be linked with practical techniques for reporting on emerging risk and strategic risks, to mirror text from the recent Walker Report (see separate Appendix at the end of this paper).
- How should firms report and communicate tail dependencies and correlations to stakeholders including senior management, the Board and regulators. This includes mechanisms for reporting, and the need for effective communication. Note that the credit for diversification benefit can often be the largest single item in a firm’s assessment of its capital requirements, and hence it can be 'worth millions (if not billions)' to get this right.
The research proposed should concentrate on enterprises whose main business is the acceptance or transformation of risk, where the focus would not be limited to the negative aspects of exposure to risk but also the potential of managing risk successfully to enhance the enterprise’s potential. A preference will be shown to proposals that can be applied across traditional actuarial practice areas and more widely.
The successful proposal will be one where practical solutions are proposed to the questions set out above, including specimen output for a variety of notional case studies, and where the proposer can demonstrate how the research will benefit the users of actuarial services in the ERM arena. The Profession are encouraging proposals that concentrate on the development of future practice in this area that is innovative, but also practical and attainable, and which will make a significant contribution to the development of thought. Whilst the limited use of surveys is not ruled out, we are not anticipating surveys of current practice and opinions but a focus on future thought leadership in ERM.
If you have any questions or wish to discuss any aspect of our funding for member-led research please contact the Research and Knowledge Team:
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Delivered by the IFRS 17 Contractual Service Margin working party.
The Certified Actuarial Analyst (CAA) qualification has rapidly established itself as adding real value, to insurers and consultancies, and to the clients of consultancies, around the World. CAAs work alongside actuaries and actuarial students, as well as other financial services professionals, in an increasingly broad range of roles and fields.
This session is a repeat of the one earlier today at 09:30
Many individuals and institutions have a long-term focus, and invest funds for the benefit of future generations. Their strategy should reflect their long horizon. University endowments are one of the oldest classes of institutional investor, and I will present the first study of the management of these endowments over the very long term.
This year's GIRO has been re-designed as a virtual conference to offer members and non-members the opportunity to get up to date content from leading experts in the general insurance field via online webinars. All sessions will be recorded and made available to purchase and re-watch post-event on the IFoA's GI Online Learning Resource area.
This year's Life Conference has been re-designed as a virtual conference to offer members and non-members the opportunity to get up to date content from leading experts in the life insurance field via online webinars. All sessions will be recorded and made available to purchase and re-watch post-event on the IFoA's website.
This webinar will provide an update on the emerging thinking around future regulation of DB schemes:
The webinar will discuss the challenges and opportunities schemes face in evaluating end game options, choosing a target state and understanding the impact this strategic decision could have on member outcomes long after the “end state” is reached. Adolfo, Kevin and Rhian bring over 60 years of experience in the industry and a variety of perspectives as scheme actuary, covenant adviser, trustee, de-risking adviser and insurer.
Cash-flow driven investing is a game-changer for DB pension funds navigating their end-game. Suitable for sponsors who want to reduce risks on their balance sheets. And for trustees, it shifts the focus to providing greater certainty of returns, managing funding level volatility and ensuring they have enough income to pay cash-flow requirements.
Patrick Kennedy, Partner at Gateley Legal and Founding Director of Entrust (a leading professional pensions trustee company), will be delivering an update on the latest legal developments during the course of 2020. With both a pensions legal perspective and over 25 years of trustee service, Patrick will seek to highlight how the letter of the law has continued to evolve against the backdrop of a difficult and challenging year
The talk will provide an understanding of the priorities and relationships between deficit reduction contributions, in the context of wider scheme funding, and different types of value outflow from the employer based on the working party’s recently published report.