As a carrier executive, you probably don’t get excited at the thought of complying with regulations like the Own Risk Solvency Assessment, commonly known as ORSA.
Executive Summary
When it is done well, the scenario analysis required for an ORSA report "enables company leaders to see risks materializing before they occur," according to Carol Williams, a risk management and strategy consultant for P/C insurers, suggesting how something often viewed as a "check-the-box" exercise can become a competitive advantage.Here, she offers tips for insurance carriers to think beyond the solvency impacts of risks by ORSA assessments to consider business consequences to a full range of stakeholders with clear, specific risk statements and root-cause thinking. In addition, ORSA can drive business success when risk conversations are woven into real-time business discussions (not siloed in periodic risk committees) and kept simple enough to be actionable for leaders, she writes.
This article is the second part of a two-part article series that began in February with the article, "10 Dos and Don'ts of a Smart ORSA Report."
It’s understandable.
Your primary responsibility is to ensure the company’s success, including financial solvency, with the board, owners/shareholders, policyholders and employees holding you accountable.
Gaps in regulatory compliance can certainly prevent you from fulfilling this responsibility, but compliance often becomes a headache (and cost center) you would prefer to forget about as soon as possible, so you can focus on the “real” business of running an insurance company.
Part of the reason for this love-hate relationship with regulations can be found in the book Risk Management in Plain English: A Guide for Executives where author Norman Marks explains:
“The traditional approach to risk management is about whether the organization is taking too much risk – the kind that can lead to losses. This is the concern of the regulators.
They are much less concerned about whether the organization is achieving its potential.” (emphasis added)
Instead of an “enterprise list management” approach or mindset that breeds this sentiment, today’s article provides a blueprint for how carrier executives can use ORSA to their advantage.
