Description: In this issue, we’re pleased to share with our members some recent nice activities and initiatives of AFIR- ERM on the risk management space. Please fi nd useful information in the article below from Michael Sherris, Chairman of AFIR- ERM Section.

Description: European insurance regulation pretends to capture and rely on the 1-year 1-in-200 VaR. But there cannot exist any scientific calibration of such measure. Why?

Description: This article discusses pointing out flaws in Incentive Compensation program using short term financial metrics like Total Shareholder Return may miss non-short term financial risk and non-financial risks.

Description: This issue wraps up the publication of essays to explore solutions available to address risks in retirement and focus on risks in a DC environment.

Description: Increasing uncertainties and volatility in financial as well as real goods markets increasingly reveal that controlling systems based on deterministic and pseudo-exact values are insufficiently eligible to manage the business activities. This raises the question how management systems can be modified to generate the adequate management impulses in volatile periods. Risk management deals from identifying, evaluating and aggregating chances and risks, which again determine the potential fluctuation range of relevant performance indicators. Everyday corporate life shows that risk management is considered important; but the corresponding processes to identify, evaluate and report chances and risks are seldom part of established decision criteria. This “paradox” lets assume that risks are managed in various differing and unsystematic ways. The combination of traditional controlling methods and risk management is not primarily a methodological challenge. The behavior of the whole organization, practiced over a long-year period, has to be transferred into a new corporate culture of transparent dealing with chances and risks. This paper describes the necessary change management process, which has to come along with necessary methodological modifications.

Description: Information on the JRMS e-Library.

Description: Highlight of the ERM Symposium

Description: Companies are exposed to a variety of risks related to the development and implementation of their business strategy. There is an extensive amount of literature about enterprise risk management (ERM), yet it is still possible to find a new opportunity to analyze how different kinds of risk information can be objectively considered by senior management to enhance corporate governance and strengthen sound decision-making processes. Strategy formulation is the main part of the strategic planning process. A robust ERM framework must provide relevant risk information for decision-makers so as to reduce the possibility of selecting a mistaken strategy or overlooking an important one. Most common strategic planning tools do not even take risk into account, which worsens the situation. Subsequently, it is time to identify and measure strategic risks. They can leverage, hinder or prevent the fulfillment of the strategic objectives. Risk management may also support the development of institutional actions so as to increase the likelihood of reaching expected results. Furthermore, strategic risks should be monitored through key risk indicators to allow the identification of conditions that could lead to a risk event. This paper aims to introduce a new comprehensive model that integrates risk management into strategic planning. A number of risk tools, improvements to be made by risk managers and a practical application of the model are presented to make possible the establishment and deployment of an effective strategy by the organization.

Description: This study is designed to analyze new planning approaches and strategies that combine SPIAs with other techniques to create retirement income synergies. Using historical scenarios, it evaluates how different retirement income strategies hypothetically would have met four separate client goals: sustainable income, liquidity, accessibility and legacy. This report summarizes study findings and includes “planning points” to help readers interpret the study data.

Description: This article delves into a new line of statistical thinking of the author, that may be useful for product development actuaries. The key concept is how product design can produce products that diversify quickly, meaning that the company can be confident of a profitable product line, based on fewer sales than might be true for other designs.