Category 1 of 12 – What is risk management
The profession’s Risk Management Board is developing a ‘Risk Management Hub’ for its risk management community in order to centralise high quality risk management knowledge in one place.
This first section of the Risk Management Hub is an introduction.
You will be able to find everything you need to gain an initial grounding in the discipline, and to be able to answer the question: “What is Risk Management?”. Below you’ll find a curated collection of materials designed to help you gain:
- A view of the scale of ERM
- An understanding of how it is implemented in practice
- How it needs to develop to be of interest to actuaries
- How actuaries can contribute to the usefulness of the discipline.
Does ERM make for better business? Does it justify the spend?
Enterprise Risk Management or ERM has been around for about fifteen years. Over that time, it emerges as a management discipline, as these papers demonstrate. Yet the final paper, albeit dates, highlights a lack of rigour that might worry the more theoretical.
The two articles bring in human aspects of risk management. The first summarises important human factors, the second (John Kay is always worth reading) describes how previous risk modelling approaches may have missed the point about risk.
All of which is ably consolidated in Douglas Hubbard’s The Failure of Risk Management. Douglas is very kind about actuaries in risk management. He is also scientific in his puncturing of many common risk management tools and techniques.
Please do email email@example.com with your views on the material chosen, or suggest better material.
- Institute and Faculty of Actuaries; Institution of Civil Engineers. Handling uncertainty – the key to truly effective Enterprise Risk Management. 2011
- G. Dickinson (2001). Enterprise Risk Management: its origins and conceptual foundation. The Geneva Papers on Risk and Insurance 26(3), 360-366. DOI: https://doi.org/10.1111/1468-0440.00121
- M. Acharyya and J. Johnson (2006). Investigating the development of Enterprise Risk Management in the insurance industry: an empirical study of four major European insurers. 2006.
(Available via ResearchGate: https://www.researchgate.net/publication/255605033_Investigating_the_Development_of_Enterprise_Risk_Management_in_the_Insurance_Industry_An_Empirical_Study_of_Four_Major_European_Insurers]
- M.H. Tripp et al. (2008). Enterprise Risk Management from the general insurance perspective. British Actuarial Journal (2008) 14(3), 433-541. DOI: https://doi.org/10.1017/S1357321700001781
- P. Bromiley et al. (2015). Enterprise Risk Management: review, critique, and research directions. Long Range Planning 48(4), 265-276. DOI: https://doi.org/10.1016/j.lrp.2014.07.005
- G. Fulcher and M.F.J Edwards (2013). Risk: Behaviour under control? The Actuary (2013) October, 26-28.
- Interview with John Kay [N. Silver (2013). The mild-mannered prophet of doom. The Actuary (2013) April, 19-22.]
The Failure of Risk Management: why it’s broken and how to fix it, by Douglas Hubbard, 2nd edition, 2020.
(Access eBook after member login to IFoA eLibrary via OpenAthens)
- Chartered Enterprise Risk Actuary
- The Institute of Risk Management (or IRM)
- The Association of Insurance and Risk Managers (or AIRMIC)
- Committee of Sponsoring Organizations of the Treadway Commission (or COSO)
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