ERM-117-14: AAA Practice Note: Insurance Enterprise Risk Management Practices


#1

A Fellowship Forums Wiki Community Post

Online Link to this Reading: https://www.actuary.org/files/ERM_practice_note_030713_exposure.pdf

Topics Covered in this Reading:

  • Purpose/Introduction
  • Role of the Actuary in ERM
  • Concepts relevant to the practice and review of ERM
    • Risk culture, risk organization, and risk governance
    • Policies and procedures
  • Identifying and evaluating risks, setting strategy, and monitoring results
    • Risk identification and categorization
    • Risk evaluation
    • Risk Treatment
    • Strategic Treatment of Risk
    • Risk Monitoring
    • External Impacts and Influences
  • Future Developments in ERM

This is a wiki post, editable by anyone. Feel free to edit and add key points/extra detail above!


ERM-117-14: AAA Practice Note: Insurance Enterprise Risk Management Practices
ERM-117-14: AAA Practice Note: Insurance Enterprise Risk Management Practices
#6

Hi there!

What exactly is the difference between Risk Treatment and Strategic Treatment of Risk?


#7

Good question!

Risk treatment is how the firm is going to manage the risks that they current have

  • It involves using tools such as risk appetite, risk tolerance, and risk limits to better manage these risks

Strategic treatment of risk involves assessing how the firm can use its risks to achieve financial goals

  • The focus here is on the risk/reward trade off - Ex/ Should our strategy involve taking on this specific risk in order to achieve specific financial returns?
  • We aren’t just limiting risks, but assessing them in a decision making context

Please let me know if this makes sense