Enterprise Risk

Management

Objectives
To understand

ERM Basics
Identifying Risk
Exposures
Emerging Role of CRO
ERM in Insurance

ERM Basics

Credit Risk Management

-1970s
Financial Risk Management -1980s
Enterprise Risk Management-recent
A holistic view of total risk
management exercise focused on
core business processes with more
sophisticated analytical tools and risk
management technologies.

ERM Basics

ERM is differentiated from Hazard

Risk Management by addressing
strategic, operational and financial
risks.
Managerial decision making based on
integrated approach is bound to be
better than piece-meal approach
Financial institutions , energy and
utility companies follow CRM

Identifying Risk Exposures

Popular identifiable categories of
risks of an organisation are

Environmental Assessment
Exposure Assessment
Threat Scenarios

Low probability and high consequence

events (disasters, sabotage, terrorism &
fraud)

Risk Exposures
Market Place Risk
Operational Risks
Financial Risks
International Risks
M & A Risks

Market Place Risk

Changing Markets
Evolving Product Lines
New Operations
Increasing Customer
Expectations
De-regulations
Effects of Globalisation

Operational Risks
Technology
Human Resources
Property
Legal & Liability

Financial Risks
Capital Management
Asset Liability
Management Related
Tax Related

International Risks
Economic
Political
Cultural
Demographic

Merger & Acquisition Risks

Strategic Failures
Integration Issues
Operational Exposures

Emerging Role of CRO

Establishment of RMIS
Creating Risk Information database
Communicating Strategy to levels
Training of key participants
Continuous evaluation of philosophy

ERM in Insurance

Management of Exposures

Scenario Analysis

To evaluate alternative financial responses

ALM:

Managing extreme events through

sophisticated modeling techniques

Disaster Response

Identification & mitigation

optimising for solvency & profitability

Relationship Management