Insurance and ERM: Some Global Trends Craig Thorburn Lead Insurance Specialist, The World Bank Policy Advisory Consultant, CGAP Skype: craig_thorburn

Several institutions and organizations do surveys. Two recent ones: – North Carolina State University (Compares a wide range of types of entity, focused on the USA) – Deloitte (A smaller group and only financial institutions only, but global) Presenter experience from discussions with insurers and insurance supervisors. 2

My first question… Why do you have the amount of capital that you have? The answer will tell you how well your ERM is working.. 3

Not yet where we want to be ERM increasingly a business necessity based on actual experience – “65% of enterprises, more larger entities or public companies, admit they were caught off guard by an operational surprise” – Only 25% of respondents consider they have a complete formal ERM in place (unchanged) – 52% indicate ERM is yet to be viewed as a strategic advantage Boards and external stakeholders (through interest in greater disclosure) are pressing senior management to be more engaged. Close to half of respondents have internal ERM oriented risk committee at senior management level who meet at least quarterly. Although only 32% of surveyed entities have a designated CRO, this is far more / most likely for financial services entities. 4

Full Sample Largest Entities Public Cos Financial Services Not-for- profits No ERM process in place Partial ERM in place addressing some but not all risk areas Complete formal ERM in place Maturity of ERM – Robust Mature Evolving Developing Very immature Adoption and Maturity of ERM: Percentage of Respondents

Full Sample Largest Entities Public Cos Financial Services Not-for- profits Boards asking for increased senior management engagement is - Extensive Mostly Somewhat Combined Designated individual serving as CRO Reports to CEO Reports to Board / Board Committee Reports to CFO Adoption and Maturity of ERM: Percentage of Respondents

Full Sample Largest Entities Public Cos Financial Services Not-for- profits - Regulatory demands Unanticipated risk events Emerging best practices Emerging corporate governance requirements Boards of director’s requests Factors mostly or extensively leading to increased senior executive focus on risk management activities: Percentage of Respondents

Full Sample Largest Entities Public Cos Financial Services Not-for- profits Maintain enterprise wide risk inventories Guidelines to business line leaders on assessing risk (probability / impact) 28 / 2948 / 4946 / 4743 / 4219 / 17 Frequency that inventories are updated - Not at all Annually Semi-annually Quarterly Monthly or more frequently Risk Inventories and Assessments: Percentage of Respondents

Particular regulatory directions ORSA Requirements for risk tolerance statements, risk management policies and processes… – ERM seen as a way to turn risk management obligations into core business value add (even if not yet fully in place) Capital management policies, and risk based capital and supervision approaches. 9

Key themes … Regulatory drivers Business drivers – governance etc Reactions to having had a bad experience Just plain good ideas 10

Concluding comments 11