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.
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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.
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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.
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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 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
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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