Developing the Risk Function to be Board-relevant (under Solvency II) - international flavour in presenters, so bear that in mind when you look at the slides!
- Jose Morago presentation - Aviva's EU Risk Director has a nice slide on educating and supporting the Board on risk responsibilities, but on the Risk function's "four distinct personalities", I would disagree that the function "leads the optimisation of the insurer's risk/capitalisation profile" (advises, certainly, but leads?). The personalities seem to be light on review and challenge activity as well, and there is a fair amount of risk jargon, which Boards are never keen on in my experience.
- Kendra Felisky presentation - While Jose went with Risk function as "Officer, Business Leader, Teacher and Advisor", Kendra has the second line of defence as "Assess, Monitor, Support and Challenge", which I concur with, and goes on to comment that "Our job is to enable to Board to do their job", which I would also subscribe to. She has a rather dated slide showing what the Risk function was compared to what it is/needs to be (you'd need a time machine to remember the 'old' Risk function!), and a good slide on levels of participation in risk management, and MI requirements. The slide on how to talk to the Board recommends 'no jargon' (which cuts across Jose's terminology a bit!), and the section on Key Risk reporting seems to be focused on risk mitigation and elimination, rather than optimisation.
- Pierre-Andre Camps presentation - Feels like a lot is lost in translation on these slides, so have a leaf through, but don't hang your hat on anything.
- Only half have their CRO communicating directly with the Board on risk matters- surely explains the necessity of this event!
- Horrifically, almost half said risk papers are "noted with a short discussion" at Boards - is the problem that all papers are not 'risk papers', hence it can be siloed as a talking point?
- Half said the process of implementing Solvency II affects their ability to becoime relevant to the Board - that is definitely a bad development all round
- Three-quarters said there is no action plan or training programme to aid the Risk function in communicating and presenting to Boards.
- A third of attendees report to a CRO, while a quarter report to a CEO (I find that instinctively high)
- Not surprised by smattering of risks not covered by the attendees' functions - smaller companies are unlikely to cover financial and non-financial categories, and the categories with least coverage tend to lean towards having expert ownership and established controls (ALM in particular).
- Over half felt they had overlap with either Actuarial or Compliance
- A worrying number are not directly delivering testing and validation of the internal model. Understandable on the design/implementation/documentation front, but surely testing and validation?
