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Risk management

3:58 PM | Posted by |
We believe a robust stress and scenario testing process is
an essential part of a risk management framework. The
RMORSA process is an ideal opportunity to perform a
comprehensive stress and scenario exercise. When properly
orchestrated, the RMORSA will take place in conjunction
with an organization’s business planning process. This is an
ideal time to stress- and scenario-test business plans, risk
exposures, and appetite metrics in a comprehensive and
coordinated manner.
However, the majority of survey respondents said that their
companies do not have a fully operational stress testing
program. Furthermore, the maturity of stress testing varies
across the life, P&C and health insurance sectors. Moreover,
only three quarters of responding companies have a risk
dashboard or risk management information pack. Of those
with such information, 36 percent reported that the process
to produce this information takes longer than a month, while
60 percent of companies produce this quarterly, and only 20
percent do so monthly.
Correspondingly, only 78 percent of companies reported
having a formal process to address risk identification, and
only one in five reported having a dedicated emerging risks
team. Moreover, many companies indicated they do not
have fully documented risk policies that cover the significant
risks to which they are exposed. In addition, only 41 percent
of companies reported that they actively review, update and
enforce all risk management policies.
Lastly, only 55 percent of companies reported a high degree
of coordination between and among risk, finance and
compliance functions, and a further 42 percent reported a
moderate level of coordination. Of those who reported a high
degree of coordination, 28 percent reported that they fully
embed risk appetite in the business planning cycle.