Solvency II and making sense of enterprise risks

5 November 2010

Neil Cantle, an actuary with Milliman, along with Jeff Allan of DRTS and Neil Allan of Systemic Consulting, will be leading a workshop at the Actuarial Profession’s life conference, held in Birmingham from 7 to 9 November 2010, which will examine how to properly examine risk interactions.

Solvency II requires risk interactions to be considered, yet typical risk management techniques split risks into categories which are studied separately then aggregated to look at the overall risk profile. This loses valuable information about the risk interactions leading to potentially dangerous conclusions.

Mr Cantle explained: “Risks emerge through time through complex interactions. So, rather than study each facet individually, practitioners have to study these interactions. Existing frameworks aggregate things in a fundamentally different way to how risks happen in practice. We live in a world of complex adaptive systems, and these can tip over very quickly. The old approaches do not appropriately capture the emergent and multi-characteristic nature of risk.”

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Enquiries: Tel. Michael Scanlan on 020 7632 1453 / 07798 804 871 or email michael.scanlan@actuaries.org.uk

Notes for editors

Actuaries provide commercial, financial and prudential advice on the management of a business’s assets and liabilities, especially where long term management and planning are critical to the success of any business venture. They also advise individuals, and advise on social and public interest issues.
Members of the Profession have a statutory role in the supervision of pension funds and life insurance companies. They also have a statutory role to provide actuarial opinions for managing agents at Lloyd’s.
The Profession is governed by the Institute and Faculty of Actuaries. A rigorous examination system is supported by a programme of continuing professional development and a professional code of conduct supports high standards reflecting the significant role of the Profession in society.
The Profession is available to provide expert comment to the media on a range of actuarial- related issues, including enterprise risk management, finance and investment, general insurance, health and care, life assurance, mortality, and pensions.

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