Summary
Insurance ERM is often the sum of several parallel programmes — capital modelling, ORSA, risk register, appetite — with insufficient connective tissue. A coherent framework treats them as one system.
Taxonomy
The risk taxonomy should reconcile insurance-specific risk categories (underwriting, reserving, catastrophe, longevity) with financial and operational categories, without double-counting.
Appetite
Appetite metrics should tie to both regulatory capital measures and internal measures of earnings volatility, liquidity and reputation.
ORSA
The ORSA is the integration document. Done well, it narrates the connection between strategy, risk profile, appetite, capital adequacy and management actions. Done poorly, it is a compilation.
Capital model
Standard-formula or internal, the capital model is a risk instrument, not only a regulatory one. Its assumptions and limitations should be transparent to the board.
Governance
Risk and actuarial functions have overlapping remits in insurers. Clarity of accountability at process level prevents both duplication and gaps.
Limitations
Insurance risks have long tails. Framework maturity is judged over cycles, not over a single reporting period.
Related expertise
See Insurance Risk & Solvency and Enterprise Risk Management.
Frequently asked questions
What should risk leaders know about taxonomy?
The risk taxonomy should reconcile insurance-specific risk categories (underwriting, reserving, catastrophe, longevity) with financial and operational categories, without double-counting.
What should risk leaders know about appetite?
Appetite metrics should tie to both regulatory capital measures and internal measures of earnings volatility, liquidity and reputation.
What should risk leaders know about oRSA?
The ORSA is the integration document. Done well, it narrates the connection between strategy, risk profile, appetite, capital adequacy and management actions. Done poorly, it is a compilation.
What should risk leaders know about capital model?
Standard-formula or internal, the capital model is a risk instrument, not only a regulatory one. Its assumptions and limitations should be transparent to the board.
What should risk leaders know about governance?
Risk and actuarial functions have overlapping remits in insurers. Clarity of accountability at process level prevents both duplication and gaps.