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Nick Drumbreck |
On Monday, the UK’s Institute of Actuaries released a discussion paper, “Enterprise Risk Management from the General Insurance Actuarial Perspective”, which proposed that risk management, and enterprise risk management (ERM) in particular, should be considered part of the necessary skills of the actuarial profession.
This paper, first presented at a sessional meeting, chaired by the Institute’s President, Nick Dumbreck of Watson Wyatt, at their headquarters in Staple Inn Hall, was put together by a team from their Risk Management Special Interest Group under the leadership of Michael Tripp, Group Chief Executive of Ecclesiastical. The paper has as its ERM objectives; to be a reference document for practitioners in general insurance, to look to future developments in the insurance industry, and to consider the implications on the UK actuarial profession.
The Institute, and its Scottish equivalent, the Faculty of Actuaries, have endorsed the statement “all actuaries are risk managers now”. The paper takes this further forward in suggesting that the position of chief risk officer (CRO) would be a natural progression for an actuary in a financial organisation. It also suggests the possibility of a new role, the ERM Actuary, who would sit alongside the CRO to ensure that risk management decisions reflected the risk profiles of an organisation in an actuarial, i.e. analytical and systematic, way.
Educational implications play a major part in the paper and a draft syllabus is put forward for both the managerial and technical actuarial exams. In this, the Institute is following the path taken by the Society of Actuaries and the Casualty Actuarial Society in the USA, The Institute of Actuaries of Australia and the International Association of Actuaries.
The paper is a well structured overview of ERM from a procedural and managerial point of view. It does not go into quantitative modelling techniques but provides enough information for those in general insurance embarking on risk management consideration and planning, if not implementation.
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