Friday, 6 July 2012

ORSA guidance from Accenture - good, bad and ugly?

In the same week as the FSA told the industry to "go fish" for additional guidance around ORSA, the guys at Accenture have pushed out a bite-sized piece on extracting added value (i.e. above and beyond "compliance") from one's ORSA processes.

There are clearly a number of consultancies who fancy themselves in this space (click the ORSA link in the tag cloud at the bottom of this webpage for my review history of them), so having cast an eye over it, I noted the following;
  • Leads with the rather hackneyed soundbite around ORSA helping insurers "extract additional value" from what is ostensibly a compliance investment
  • Note that "...many companies have just begun to implement their ORSA projects, or are still considering how to do so" - if that's the case, it is good for my business, but it sounds like a lazy justification for publishing this pamphlet (how can anyone only be as far as "considering" in mid 2012?)
  • Recommend that operational specifications should derive from the C-suite - easier said than done, but I totally agree if one wants to extract value from the ORSA process rather than tick the box.
  • Suggest that ORSA "...may become a source of competitive advantage" - clearly the assessment does not do this, rather the consideration of it by the AMSB and the application of management actions off the back of it.
They then go on to split the doc into sections as below;

Compliance requirements
  • Neat enough as a beginner's guide to ORSA compliance 101, though they introduce a rather naughty term in "ORSA Capital" as the amount over and above SCR - the concept of ORSA is difficult enough to transpose into BAU for smaller organisations who perhaps haven't had to consider economic capital measures before, so this term is one I would consign to the "nice try" bin.
  • Some nice schematics in the section as well around the process side of ORSA.
Creating an operating model
  • Suggest that preliminary input should be obtained from the C-suite to create one's target operating model. As above, I agree with their participation in the design phase, but with BAU pressures around ICA/FCR etc, it should be weighted much more towards approval of recommended models, rather than dialogue, as there simply isn't enough time when dual running.
  • Recommend designing the process with people already familiar with existing performance management framework, which is good advice.
  • Also allude to the significant crossover synergies between Pillar 3 requirements (as documented in the draft implementing measures) and ORSA as it stands.
Develop risk-adjusted performance management
  • Relatively bland section which won't tell you anything new on the topic if you are building/refining an ORSA process off the back of a reasonable ERM Framework
Make the most of these releases - you can be sure that your friendly national regulator will be!

PS - In case you viewed this on Friday looking rather bare, I was supposed to save it as a draft, and accidentally published it!

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