future pathways - rm (final)
TRANSCRIPT
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Future Pathways Fresh perspectives from actuaries of the future
Auckland, 15 March 2011Wellington, 16 March 2011
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Future Pathways Fresh perspectives from actuaries of the future
Risk ManagementKlaas Stijnen, DeloitteJames Xu, AMP
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Risk and Actuaries Life, Health, General……
Risk Actuaries?
Life HealthGeneral Risk
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What is RiskRisk is……
• Accident?
• Potential of loss?
• Opportunity?
• Lost money to share market during the GFC?
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US House Price
1998
1999
…
2005
2006
2007
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GFC Overview
The Economy
2008
– Panicking– Securitisation took hit,
private sector almost vanished
– Meetings!– Investigations!– Rescue!
2005
– Job market going up– House Price going up– Interest Rate going up
– Let the market look after itself
2007
– Some defaults started to appear
– Securitisation volume still high
– The market will look after itselfRegulator
2006
– Job market going up– House Price going up– Interest Rate going up
– Let the market look after itself
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How did the system collapeRating Agencies Regulators
Banks Investors
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Enterprise Risk Management
Source: Harry Panjer
Regulator InvestorRating agency CEO with Stock optionsCRO???
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Enterprise Risk Management• What is ERM?“an organisation (…) assessing, exploiting, financing and monitoring risks from all sources for the purpose of increasing the organisation’s short- and long-term value to its shareholders.”
• Why ERM? Thorough understanding of risks Pursue higher return for shareholders Provide better information to external stakeholders
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ERM Process
Risk identification
Risk monitoring
(reactive) risk management
Risk based strategy
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ERM Framework Example
Risk AppetiteHow much value are we willing to put at risk with which probability?
Risk toleranceRisk Factor 1
Risk FactorsInsurance, lapse, interest rate, equity etc
Risk toleranceRisk Factor 2
Risk toleranceRisk Factor …
Risk toleranceRisk Factor N
Framework to manage Risk Tolerances
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CERA Designation Global Recognition
Technically “approved”
Risk management specific
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Discussion?