Future Pathways Fresh perspectives from actuaries of the future Auckland, 15 March 2011 Wellington, 16 March 2011
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Future Pathways Fresh perspectives from actuaries of the future
Auckland, 15 March 2011Wellington, 16 March 2011
Future Pathways Fresh perspectives from actuaries of the future
Risk ManagementKlaas Stijnen, DeloitteJames Xu, AMP
Risk and Actuaries Life, Health, General……
Risk Actuaries?
Life HealthGeneral Risk
What is RiskRisk is……
• Accident?
• Potential of loss?
• Opportunity?
• Lost money to share market during the GFC?
US House Price
1998
1999
…
2005
2006
2007
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
How did the system collapeRating Agencies Regulators
Banks Investors
Enterprise Risk Management
Source: Harry Panjer
Regulator InvestorRating agency CEO with Stock optionsCRO???
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
ERM Process
Risk identification
Risk monitoring
(reactive) risk management
Risk based strategy
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
CERA Designation Global Recognition
Technically “approved”
Risk management specific
Discussion?
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