My insurance services

In addition to the ARMS offering I have 20+ years of insurance experience, especially in the protection and reinsurance sectors. This page focuses mainly on risk, but I can also offer pricing, data-driven underwriting development and product/proposition development expertise. Or just throw a really tough problem at me!

Subject to client needs, risk management services are framed with three objectives in mind:

  1. Focusing on value: To target risk management value from the outset, ideally based on agreed risk-adjusted value metrics and/or softer measures.
  2. Closing the gap: To close unnecessary gaps between the risk management function and other business functions, for mutual benefit.
  3. Easing the slog: To make risk management work easier and faster, increasing the value per unit of work.

ORSA: Own Risk and Solvency Assessmentfor insurers and reinsurers

The Own Risk and Solvency Assessment : Insurers will need an ORSA process and report as part of Solvency II. But it seems that, as of mid-year 2015, the focus for many insurers is still on Pillar 1. Pillar 3, with its mandatory reporting, is bound to get emphasis. But this is what the PRA and EIOPA think of Pillar 2:

In many respects, the ORSA can be considered the cornerstone of Solvency II. Solvency II: a turning point – insurance industry briefing by Prudential Regulatory Authority
The ORSA ... changing the viewing angle from bottom up to top down ... and gives the supervisor insight into the level of quality of the management or supervisory body's risk understanding ORSA: the heart of Solvency II – EIOPA

Pillar 2 and the ORSA is (part of) the risk management an insurer should be doing even if it were not regulated. It offers a dual opportunity:

  • To enhave your own risk management, asking real world questions that are a step towards value-based risk management.
  • To demonstrate to the regulator the quality of your risk management when it is not informed by detailed guidance.

I can help you to:

  • Refine and document your risk management framework.
  • Structure the ORSA process and report, so that it reflects sound advice and makes sense for everyone.
  • Work through appropriate scenarios, so that they don't become a (suspiciously) good news story.
  • Link scenarios and potential failure to management contingency plans and actions.
  • Write, or support the writing of, your ORSA report, so that it becomes owned by your Board.

LTVS: Longer Term Viability Statement for UK companies

Many non-financial and financial firms will have to produce one for year ends starting after 1 Oct 2014. Why not make the most of it?

I can help you to:

  • More than comply with FRC requirements, without risk management becoming a millstone.
  • Work out what long term viability means for you: solvency, liquidity or more?
  • Build or support the building of appropriate models for stress and scenario testing.
  • Calibrate the above, working with your experts.
  • Refine and document your risk management framework.
  • Work towards a risk (and return) appetite that is both robust and practical.
  • Structure the Longer Term Viability Statement, so that it:
    • makes sense and is helpful for stakeholders
    • fits with the rest of the disclosures in the Strategic Report
  • Link the LTVS to your ORSA, if you are an insurer.

ORVA: Own Risk and Value Assessment for the commercially ambitious

The ORSA for insurers and the LTVS for some companies are steps towards robust risk management. But their primary focus is solvency and liquidity

The Own Risk and Value Assessment steps up from ORSA and LTVS to focus on optimising risk-adjusted value.

There are three major business applications of risk management: loss reduction, uncertainty management and performance optimisation. The combination of all three is enterprise risk management.James Lam – the world’s first Chief Risk Officer
  • Loss reduction. The ORSA and LTVS makes an excellent contribution to (a). The stress and scenario testing provide a check on the adequacy of the current capital to support the firm's intended strategy. It's a short stretch to management actions and risk appetite – good, but focused on extreme downside.
  • Uncertainty and decision making: But ORSA / LTVS don't focus on more general uncertainty. They are a hurdle your strategy and capital must pass, but won't help you set a strategy which actively reflects uncertainty. ORVA can help with this and also reflects day-to-day uncertainty, not just survival.
  • Performance optimisation: ORVA has a strong focus on models and optimisation – a value focus which stretches for the upside. In gambling terms it's about money management and bet sizing, not just about avoiding going bust. OVRA delivers the full vision and competitive advantage.
© 2014-2017: 4A Risk Management; a trading name of Transformaction Development Limited