End-to-end ORSA Process, and Integration with ERM and Finance Processes

Bogie Ozdemir

ORSA builds on enterprise risk management, and integrates ERM processes with strategic and business planning processes. Some insurers have already advanced ERM frameworks and risk governance structures with supporting board-approved policies. These firms will have to integrate their existing ERM with ORSA. Those firms without a sufficiently advanced ERM will have to put their efforts to building one as a foundation for ORSA.

ORSA also integrates into strategic and business planning, capital management and the corresponding actuarial and finance processes along the way. In this chapter, we will focus on this integration, and explain the end-to-end ORSA process and the intersection points with ERM, strategic and business planning, and capital management. The ORSA process therefore creates a direct link between risk and capital management. It identifies explicitly the risk strategy as the control variable in the risk versus return optimisation framework – or, more directly, ROE maximisation. Completion of this cycle demonstrates effectively the use test of integrating ORSA into the firms’ decision-making processes at all levels (these topics will be discussed in Chapter 8).

Here