Leveraging regulatory requirements to generate value
In this discussion paper the CRO Forum provides a set of standards that could be applied by insurance undertakings with respect to conducting a self assessment of risk and capital solvency called Own Risk and Solvency Assessment (‘ORSA’). Although the ORSA is driven by regulatory requirements it has an intrinsic value to internal stakeholders to manage risk, capital and solvency at an enterprise level in an insurance undertaking.
We recognise and value the respective work of EIOPA, NAIC, IAIS, as well as the Dutch Insurance Association (VVV) on this topic. These papers highlight how ORSA captures best risk management practice that companies would conduct, even if there were no regulatory requirement to do so. In this paper we would like to clarify some of the key elements of the ORSA as well as provide some additional guidance on the application of the ORSA for undertakings. The CRO Forum has therefore prepared this paper with the following objectives:
- articulating an understanding of the ORSA and its components, providing a possible structure for reporting one’s own risk and solvency assessment;
- elaborating on the ORSA standards for Solvency II and beyond. It also aims at engaging with other trade and professional associations on this critical risk and capital management concept; and
- influencing regulatory insurance groups in EEA jurisdictions to achieve common expectations pertaining to ORSA reporting, specifically limiting a prescribed format by regulators with what should essentially be management’s own tool for reflecting upon business initiatives and their forward looking sustainability.