2009 Annual Meeting ● Assemblée annuelle 2009Halifax, Nova Scotia ● Halifax (Nouvelle-Écosse)

2009 Annual Meeting ● Assemblée annuelle 2009Halifax, Nova Scotia ● Halifax (Nouvelle-Écosse)

Canadian Institute

of Actuaries

Canadian Institute

of Actuaries

L’Institut canadien desactuaires

L’Institut canadien desactuaires

PD-18 ERM Going Global

Stephen P. D’Arcy Professor Emeritus of Finance,

University of IllinoisMember of the Global ERM

Designation Treaty Task Force

Global Enterprise Risk Management Designation

Recognition Treaty

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Overview

• Purpose of Treaty• Background

– ERM– Specialists Moving into ERM– Actuarial Global Designation

• Key Elements of Treaty – Global Enterprise Risk Management

Designation Recognition Treaty - version 6.2 (June 2009)

• Next Steps

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Purpose of Treaty

• Develop an agreement among actuarial organizations on a single, globally recognized ERM designation– Enhance the role of actuaries in ERM– Facilitate international ERM applications– Develop a consistent standard for the

ERM designation– Allow members of multiple organizations

to gain this recognition by qualifying with one organization

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Background of ERM

• ERM developed in the 1990s as a response to financial risk management failures– Chief Risk Officers– Regulation

• Basel• Sarbanes-Oxley

– Role of risk management expanded to all risks

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Specialists Moving Into ERM

• PRMIA – Professional Risk Manager’s International Association

• GARP – Global Association for Risk Professionals

• Accountants• COSO - Committee of Sponsoring

Organizations of the Treadway Commission

• Financial Engineers• Actuaries

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Actuarial Global Designation

• Statement of Intent– Dublin IAA meeting – October 2007

• 15 Actuarial Organizations Heavily Involved, including CIA

• Treaty Task Force, chaired by Fred Rowley (Australia)

• Syllabus Task Force, chaired by Harry Panjer

• Approximately a dozen organizations are now prepared to sign this treaty

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Key Elements of Treaty - 1• Terms

– Founding Party – initial signatory– Acceding Party – subsequent signatory– Award Signatory – awards designation– Board

• First 3 years - representatives of all founding and acceding parties

• After 3 years – representatives of award signatories

– Review Panel – evaluates designation process of potential award signatories

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Key Elements of Treaty - 2

• Each signatory agrees to meet educational standards for awarding designation to its members

• If a member has earned this designation from another signatory, that will be accepted by other signatories

• Designation will be termed CERA2009

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Key Elements of Treaty - 3

• Awarding designation– Must be to IAA Fully Qualified Actuary– Subject to code of ethics or professional

conduct– Meets educational standards of approved

syllabus• Examined by actuarial organization• Qualified by an accredited education provider20

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Key Elements of Treaty - 4

• Weighted Voting– If not on the Board, 1 vote– If on the Board (once board exceeds 8)

• 2 votes plus • 1 vote for 200-599 Fully Qualified Actuaries• 1 vote for each 400 FQA over 200 up to 9000• 1 vote for each 800 FQA over 9000

– Weight limited to 12.5% of total votes– Once 10 or more award signatories each

have awarded 50 or more designations, policy will be reviewed to shift toward designees instead of FQA

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Next Steps

• Signing of treaty by founding parties– Expected to be by 30 June 2009

• Form Implementation Steering Group– Fred Rowley will chair– CIA, CAS, SOA + 10 other organizations

• Form Review Panel• For individual organizations

– Determine how to award this designation– Apply for award designation status– Begin to award designation

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