Enterprise risk management
Businesses and organizations are constantly faced with uncertainties brought on by the growth of competitors, market volatility, capital scarcity and evolving legislation. In order for them to succeed while meeting the expectations of their stakeholders, they must manage these risks.
Actuaries working in enterprise risk management (ERM) identify, assess, monitor and manage risks, with the goal of increasing value for an organization’s stakeholders and supporting strategic plans and goals. By applying their unique skills and expertise, actuaries working in ERM:
- create awareness of and deliver education about the risks that organizations may incur;
- help organizations maximize profits, increase book value and expand into new markets; and
- empower organizations to embrace opportunities and deliver on their promises.
ERM does not apply to just financial risk, but rather to a wide variety of risk – including strategic, operational and more. By bringing modelling techniques from other practice areas into ERM, actuaries are able to apply their skills in a new area and provide insights that may not be present from other disciplines.
ERM resources
Foundation
Enterprise Risk Management: Managing Risks in Uncertain Times (CIA/2023)
Practice Resource Document: Actuarial Aspects of Enterprise Risk Management (CIA/2021)
Practice Resource Document: Risk Appetite (Practice Development Council/2021)
Future Long-term Care in Canada: An Enterprise Risk Management Framework to Identify and Quantify Major Concerns (SOA, CAS, and CIA/2020)
Enterprise Risk Management for a Captive Audience (Alvarez and Troutman/2020)
“Hungry for Risk?” (Scotchie and Murphy/2019)
Enterprise Risk Management 2019: The New Wave of Risks (CIA/2019)
National Risk Management: A Practical ERM Approach for Federal Governments (Sim Segal/2018)
Actuarial Aspects of ERM for Insurance Companies (IAA/2016)
Case Study: Defining Risk Appetite and Tolerance (Australian Government Department of Finance/2016)
Enterprise Risk Management A “risk-intelligent” Approach (Deloitte/2015)
Risk Appetite: Survey Results (CRO Forum/2015)
Developing the Risk Appetite Framework of a Life Insurance Business (Institute of Actuaries of Australia/2015)
Deriving Value from ORSA Board Perspective (IAA/2015)
Risk Appetite in Practice: Vulgaris Mathematica (Hassani/2014)
Establishing and Embedding Risk Appetite: Practitioners’ View (CRO Forum/2013)
Principles for An Effective Risk Appetite Framework (FSB/2013)
Risk Appetite: Linkage with Strategic Planning (Shang and Chen/2012)
Introduction to Constructing a Risk Appetite Framework (Society of Actuaries in Ireland/2011)
Corporate Value of Enterprise Risk Management (purchase required) (Sim Segal/2011)
“A structured approach to Enterprise Risk Management (ERM) and the requirements of ISO 31000”
(Airmic/2010)
Comprehensive Actuarial Risk Evaluation (IAA/2010)
“Risk Culture of Companies” (Abstract) (Farrell and Hoon/2009)
Enterprise Risk Management: From Incentives to Controls (purchase required) (James Lam/2003)
US and Canada: An Era of Value-added Enterprise Risk Management (SOA, CAS, CIA/2022)
2022 Research Report: Managing Risk (Insurance Institute/2022)
Social Risks – for a Financial Services Business (Ian Laughlin/2018)
Risk management – an actuarial approach (IFoA /2017)
ERM, how do we govern it? (CIA ERM Applications Committee/2016)
ERM Governance Issue Discussion #1 (CIA, Micheline Dionne/2015)
ERM Governance Issue Discussion #2 (CIA, Minaz Lalani/2015)
ERM Governance Issue Discussion #3 (CIA, Kathryn Hyland/2015)
Recognizing When Black Swans Aren’t (Guntram Fritz Albin Werther/2013)
ORSA – An international requirement (Milliman/2013)
Note on the use of Internal Models for Risk and Capital Management Purposes by Insurers (IAA/2010)
What Is a Good External Risk Measure: Bridging the Gaps between Robustness, Subadditivity, and Insurance Risk Measures (Heyde, Kou and Pen/2009)
Risk Assessment Models (CIA/2008)
Enterprise Risk Management Specialty Guide (SOA/2006)
An Introduction to Risk Measures for Actuarial Applications (Mary R. Hardy/2006)
Coherent Measures of Risk (Artzner, Delbaen, Jean-Marc and Heath/1999)
Axiomatic Characterization of Insurance Prices (Wang, Young and Panjer/1997)
Specific topics
Principles for the effective management and supervision of climate-related financial risks (Basel Committee on Banking Supervision/2022)
“Is It Really Different This Time?” (Mary Pat Campbell/2020)
Non-modelled Risks (Association
of British Insurers/2014)
Catastrophe Modelling and Climate Change (Lloyd’s/2014)
Geomagnetic Storms (OECD/2011)
Making Flood Insurable for Canadian Homeowners (Swiss Re/2010)
Research Paper on Time Horizons and Terminal Provisions (KPMG/2010)
The One-year Non-life Insurance Risk (Esbojorn Ohlsson & Jan Lauzeningks/2010)
Research Paper: Considerations for the Development of a Pandemic Scenario (CIA/2009)
Bond Portfolio Investing and Risk Management (purchase required) (Vineer Bhansali/2010)
Measuring Market Risk (Kevin Dowd/2005)
Development and Validation of Credit Scoring Models (Glennon, Kiefer, Larson and Choi/2008)
Sound credit risk assessment and valuation for loans (BCBS/2006)
Estimating Probabilities of Default for Low Default Portfolios (Pluto and Tasche/2005)
Empirical Validation of Retail Credit-Scoring Models (Grigoris Karakoulas/2004)
Revisions to the Principles for the Sound Management of Operational Risk (Basel Committee on Banking Supervision/2021)
Principles for Operational Resilience (Basel Committee on Banking Supervision/2021)
Operational Risk Dependencies (P.O.J. Kelliher/2020)
Good Practice Guide to Setting Inputs for Operational Risk Models (P.O.J. Kelliher/2016)
“Operational Risk – What is it? And What Do I Do About It?” (Larry Zimpleman,
SOA/2015)
Research Paper on Operational Risk (KPMG, CIA/2014)
Model Validation for Insurance Enterprise Risk and Capital Models (Stricker, Wang and Strommen/2014)
“Model risk mitigation and cost reduction through effective documentation”
(PwC/2013)
Practice Resource Document: Risk Diversification (Practice Development Council/2023)
Research Paper: Risk Aggregation and Diversification (CIA/2016)
Model Validation for Insurance Enterprise Risk and Capital Models (Stricker, Wang, and Strommen/2014)
“Difficult risks and capital models” (purchase required) (Extreme Events Working Party/2014)
Capital Allocation by Percentile Layer (Neil M. Bodoff/2013)
Diversification Consideration on Modelling Aspects & Related Fungibility and Transferability (CRO Forum/2013)
Principles for effective risk data aggregation and risk reporting (BCBS/2013)
Developments in Modelling Risk Aggregation (BCBS/2010)
Inter-Risk Correlation within Economic Capital (Hanna Larsson/2009)
Capital Allocation to Business Units and Sub-Portfolios: the Euler Principle (Dirk Tasche/2008)
A framework for incorporating diversification in the solvency assessment of insurers (CRO Forum, 2005)
15th Survey of Emerging Risks (SOA, CAS, CIA/2022)
“An Evolving Emerging Risk: Interest in climate change is growing among risk managers” (Max J. Rudolph/2021)
An introduction to emerging risks and how to identify them (IRM/2021)
Quantification of Cyber Risk for Actuaries: An Economic-Functional Approach (SOA, CAS and CIA/2020)
Emerging Risks Initiative: Major Trends and Emerging Risk Radar (CRO Forum/2020)
Future Risks Report (AXA/2019)
Taking a Strategic Approach to Emerging Risks (Bonnie Hancock/2016)
Emerging Risk Assessment (Allan and Corrigan/2013)
14th Annual Survey of Emerging Risks – Key Findings (SOA, CAS and CIA/2021)
13th Survey of Emerging Risks (SOA, CAS and CIA/2020)
12th Survey of Emerging Risks (SOA, CAS and CIA/2019)
12th Annual Survey of Emerging Risks – Key Findings (SOA, CAS and CIA/2019)
11th Survey of Emerging Risks (SOA, CAS and CIA/2018)
11th Annual Survey of Emerging Risks – Key Findings (SOA, CAS and CIA/2018)
10th Survey of Emerging Risks (SOA, CAS and CIA/2017)
Standards of practice
ASOP 12 – Risk Classification (ASB/2011)
ASOP 23 – Data Quality (ASB/2016)
ASOP 46 – Risk Evaluation in Enterprise Risk Management (ASB/2012)
ASOP 47 – Risk Treatment in Enterprise Risk Management (ASB/2012)
ISAP 1A – Governance of Models (IAA/2018)
ISAP 6 – Enterprise Risk Management Programs and IAIS Insurance Core Principles (IAA/2018)
ISAP 5 – Insurer Enterprise Risk Models (IAA/2018)