Description: In response to the risks of embezzlement and branch mis-behavior, this paper describes an operational risk management framework for local Chinese securities companies and a set of tools to manage their branches. From 2007 Enterprise Risk Management Symposium, M-AS07-1.

Description: Overview of the model vetting practices of the last 20 years and challenges for the future.

Description: A discussion of the hidden costs of administering complex Products including operational inefficiency, product development constraints, increased time to market, inability to monitor experience, and lost cross selling opportunities among other things

Description: This article is about a session held at the October 1996 annual meeting, which focused on how actuaries can move beyond traditional employers.

Description: Recently researchers, practitioners, and regulators had intense debates about how to treat the data collection threshold in operational risk modeling. There are several approaches under consideration—the empirical approach, the “naive” approach, the shifted approach, and the truncated approach—for fitting the loss severity distribution. Since each approach is based on a different set of assumptions, different probability models emerge. Thus, model uncertainty arises. When possible we investigate such model uncertainty analytically, otherwise we use Monte Carlo simulations. For specific parametric examples we consider exponential and Lomax distributions which are special cases of the generalized Pareto family. Our primary goal is to quantify the effect of model uncertainty on risk measurements. This is accomplished by evaluating the probability of each approach producing conservative capital allocations based on the value-at-risk measure. These explorations are further illustrated using a real data set for legal losses in a business unit (Cruz, 2002).

Description: Many top-performing businesses aren’t just risk aware, but rather risk intelligent. Such a posture helps prepare companies for a major event and can demonstrate to a regulator or auditor that an appropriately strong control framework is in place. Better still, companies gain real strategic value from a “risk adjusted” understanding not only of their threats and vulnerabilities, but also the upside opportunities associated with various risks. It starts with having both qualitative and quantitative information to identify, assess and manage risks. Strategic risk management, at its core, is about creating value by increasing transparency and accountability, and quality of information. More than a mere compliance exercise, effective risk management enables more informed strategic decision making, increased accountability and transparency, a greater likelihood of organizational success, and – ultimately – competitive advantage, as borne out by many studies that correlate risk management and financial results.

Description: Defines and discusses operational risk as it exists in every industry, especially as it exists in the financial services industry.

Description: This article provides an overview of the evolution and rationale for Own Risk Solvency Assessment (ORSA), as well as practical implications for insurers as they begin to design an ORSA process.

Description: This research project examines operational risk management practices and assess the viability of ORM as a formal discipline. A key goal of this initiative has been to determine whether the management of operational risk is feasible, and, if so, what issues need to be addressed in order to effectively implement ORM within a broader ERM context.

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.