ERM from Principle to Practice

OIC Risk Management Seminar

30th June 2016

Pawana Thaisuwan

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Enterprise

Risk

Management

Challenges

This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to

avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

3

Global Risk

Source: The Global Risks Report 2016 11th Edition / World Economic Forum / http://wef.ch/risks2016

Economic

Environmental

Geopolitical

Societal

Technological

Global Risk 2016

This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to

avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

4

The Most Likely Global Risk 2016

This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to

avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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Source: The Global Risks Report 2016 11th Edition / World Economic Forum / http://wef.ch/risks2016

The Evolving Risks Landscape: Likelihood

This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to

avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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Source: The Global Risks Report 2016 11th Edition / World Economic Forum / http://wef.ch/risks2016

The Evolving Risks Landscape: Impact

This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to

avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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Allianz Risk Barometer :Top 10 Global Risk 2016

This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to

avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

Source: ALLIANZ RISK BAROMETER

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Allianz Risk Barometer Around the World

This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to

avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

Source: ALLIANZ RISK BAROMETER

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Top 10 business risks by region in 2016: Asia Pacific

Source: ALLIANZ RISK BAROMETER

This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to

avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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Aon Survey Global Risk Management Survey

1. Brand and damage and reputation.

2. Economic recovery

3. Regulatory change

4. International competition

5. Talent

• Cyber security

• Interconnectivity between the risks

Top Risks

Highlights

This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to

avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

Risk in 60 Seconds with John Hulsman

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1. Cyber risk management

2. InsureTech

3. Emerging risk 2016

4. Shifting demographic

5. The future of conduct risk

6. Telemetics

7. Regulation

8. Disruption to insurer

9. Embedding risk management

10. The future of operational risk

11. Longevity risk

12. The CRO’s role

13. The future of risk modelling

14. Big data

15. Hiring risk manager of the future

16. ORSA

17. ERM of the future

18. Macro issues for CRO

19. ALM of the future

20. AI and learning machine Source: RiskMinds Insurance 2016

Top Risks

This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to

avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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Keeping up with

the dynamic

changing risk

landscape and new emerging risks.

Dynamic risks Challenge # 1

This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to

avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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Tone at the top is

critical to embedding risk culture.

Tone at the top Challenge # 2

World’s top corporate

scandal happened from top executives.

This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to

avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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Risk Manager

vs

Line Manager

Who own the risk? Challenge # 3

This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to

avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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1. Make risk management

simple.

2. Explain complex

terminology.

3. Create tool for risk

owner.

4. Risk as part of business

as usual.

Simplify complexity Challenge # 4

This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to

avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

The ABC of RBC

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A net wealth of 2,560,000

Our heir would inherit

Assets Liability

+ Shareholder’s Equity

Assets Short Term Liability

Long Term Liability

Shareholder’s Equity

House 5,000,000

Car 1,000,000

TV 20,000

Total 6,570,000

Stock 500,000

Receivable 50,000

Credit Card 10,000

Home & Car Loan 4m

Net Wealth 2,560,000

Total 6,570,000

If we liquidate

ourself today

A net wealth of 2,560,000

Our heir would inherit

This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to

avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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A net wealth of 2,560,000

Our heir would inherit

Assets Liability

+ Shareholder’s Equity

Assets Short Term Liability

Long Term Liability

Shareholder’s Equity

House 5,000,000

Car 1,000,000

TV 20,000

Total 6,570,000

Stock 500,000

Receivable 50,000

Credit Card 10,000

Home & Car Loan 4m

Net Wealth 2,560,000

Total 6,570,000

House value accurate?

Car value accurate?

Stock value accurate?

Asset

Value accurate?

Include interest?

Market Risk Credit Risk

Fair Value

Risk Charge

Asset & Liability

Liability

The ABC of RBC

This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to

avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

18

A net wealth of 2,560,000

Our heir would inherit

Assets Liability

+ Shareholder’s Equity

Assets Short Term Liability

Long Term Liability

Shareholder’s Equity

House 5,000,000 Car 1,000,000 TV 20,000

Total 6,570,000

Stock 500,000 Receivable 50,000

Credit Card

Home & Car Loan

Net Wealth

Total 6,570,000

4,000,000 800,000 10,000 700,000 40,000

5,550,000 10,000

4,000,000

-1,020,000

-102,000

2,560,000

Fair Value: PAD @ 75%

-1,020,000

12,000

4,100,000

1,438,000

The ABC of RBC

This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to

avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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A net wealth of 2,560,000

Our heir would inherit

Assets Liability

+ Shareholder’s Equity

Assets Short Term Liability

Long Term Liability

Shareholder’s Equity

House 5,000,000 Car 1,000,000 TV 20,000

Total 6,570,000

Stock 500,000 Receivable 50,000

Credit Card

Home & Car Loan

Net Wealth

Total 6,570,000

4,000,000 800,000 10,000 700,000 40,000

5,550,000 12,000

4,100,000

102,000

1,438,000

Risk Charge: PAD @ 95%

1,020,000 1,020,000

10% 30% 20%

231,000

10%

20%

410,000

The ABC of RBC

This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to

avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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Total Capital Required

Total Capital Available PAD @ 75%

PAD @ 95%

=

=

Capital Adequacy Ratio (CAR)

This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to

avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

Capital Adequacy Ratio Concept

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CAR =

Free Asset 381m

Shareholders’ Equity

Liability

- Premium Liability

- Claim Liability

- Others

Assets

- Investments

- Cash

- Uncollected

Premium

- Due from Reinsurer

- Others

Reduction of Asset Value in Line with IFRS & IAS39 Principles

Fair Value Assets Additional Premium

or Claim Liabilities from Actuarial Reserve Review

Fair Value

Liability

Best Estimate

+ PAD @ 75%

TCA

619m

TCA = Total Capital Available

TCR = Total Capital Requirement (Risk Charge on

Capital)

CAR = Capital Adequacy Ratio

TCR 238m

TCA / TCR

CAR = 619 / 238 = 259%

This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to

avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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1. Risk culture & education.

2. Risk appetite statement.

3. Risk register & dashboard

4. KRI vs KPI vs KCI.

5. Management report.

6. IT & MIS support

7. Incident report.

8. Internal control.

9. Internal audit.

10.Compliance.

ERM in practice Challenge # 5

This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to

avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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1. Corporate governance & policies.

2. Strategy and risk appetite statement.

3. Organisation design (check & balance).

4. Internal control program.

5. Internal audit.

6. Risk management infrastructure.

Enterprise Risk Management

This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to

avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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Key Control Activities

1. Product development

2. Premium rating

3. Underwriting

4. Claim

5. Reinsurance

6. Investment

This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to

avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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ERM Committee

1. Member & composition

2. Term of reference

3. Agenda

• Board of director’s feedback.

• Audit, compliance, incident report.

• Risk management activity plan.

• Regulatory update.

• Risk discussion (current & emerging).

This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to

avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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1. Global trend IAIS / ICP.

2. Keeping up with

regulatory

requirement.

Regulatory compliance Challenge # 6

This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to

avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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1. Experience

2. Critical thinking skills

3. Interpersonal skills

4. Keen business acumen

5. Strong process orientation 6. Cool under fire

The right CRO Challenge # 7

How many in the market?

Independent vs dual roles!

Can we afford?

This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to

avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

Thank You