Production Model and Governance

Bogie Ozdemir

ORSA is a large undertaking for any insurance company. It must be designed, implemented, operationalised and then put into production. It will need to be run at least on an annual basis, which requires an efficient production model. In this chapter, we discuss the roles and responsibilities for each of these elements, and also the governance framework and organisation we will have to establish.

ROLES AND RESPONSIBILITIES IN THE DEVELOPMENT AND PRODUCTION OF ORSA

The board and senior management ultimately own ORSA. However, development and production is fundamentally the responsibility of the risk management function. We can see this when looking at the risk management function’s second line of defence responsibility (see Table 9.1). The risk management function is responsible for setting up an ERM framework to provide a consistent and integrated view of risk exposures across the enterprise to the board and senior management. Risk management is also responsible for codifying the ERM framework in terms of risk (exposure) metrics, measurement methodologies, corporate risk policies, stress-testing processes and risk appetite statements. The ERM framework upon which ORSA is built