12 Page ORSA (SAI ERM Forum)

Straight and messy string

The Society’s recent Enterprise Risk Management forum focused on topics currently very relevant to Irish based insurers. In this blog post, we summarise one of the key themes examined – the viability of a 12 page ORSA Report.

A 12 page ORSA

The Own Risk & Solvency Assessment (ORSA) is viewed by many as one of the most beneficial aspects of the Solvency II regime – particularly for the Board – bringing together the outputs from several risk and capital processes to provide an overall picture of the insurer’s solvency and key risks. But how good are we, as risk professionals, at distilling all this information into one user friendly document and is the ORSA report, in its current guise, really fit for purpose? Paul Harwood, having spent some time at the Central Bank of Ireland reviewing multiple ORSAs, is of the view that there is a lot done but more to do. He presented his paper on the ’12 page ORSA’, a 25 step ORSA approach resulting in three outputs – the ORSA record, a 12 page ORSA report and the “Risk Book”. Focusing specifically on the directive requirements, Paul’s presentation highlighted the distinction between the results of the process and the process itself, including the various risk assessments undertaken along the way. He suggests that this documentation of process, as well as documentation of compliance with the requirements, can be removed from the main ORSA report and instead documented in the “Risk Book”. This would allow the ORSA report, and therefore the Board’s attention, to focus on the ORSA results.  

A novel idea, but what did the attendees think? In a change to last year’s format, this year’s forum was held in round table format, with each table allocated time to discuss various aspects of the presentation and then feeding back to the room.

Overall the views were wide ranging, with many agreeing that they could certainly see a need for greater organisation and structure around the ORSA reporting process but with differing views as to whether splitting the document into two component documents would be a step in the right direction or if indeed a 12 page ORSA would really ever be sufficient for regulatory or internal purposes. Where a 12 page ORSA was viewed positively it was also noted that it is unlikely that the ORSA would be submitted to the regulator without its companion “Risk Book”, at least not initially. Others felt that the ORSA as it currently stands, while it may be long, is already a useful tool for the Board providing a go-to document that brings all the company’s risk and solvency information to one place.

Although we are only in our 2nd year of Solvency II the differing views demonstrated that the Own Risk and Solvency Assessment reports are already succeeding in being just that - owned by each company and adapted according to the needs of each Board as required. What was apparent is that now that the new regulation has been implemented, developing and ensuring its usefulness to the company is high on the agenda leaving me with no doubt that these reports will continue to evolve and improve over time.

Want to know more? Check out the Society of Actuaries website for the slides from the ERM forum: https://web.actuaries.ie/events/2017/03/sai-erm-forum.


Danielle O'Sullivan is Head of Capital Modelling in Zurich Insurance PLC and a member of the SAI's Enterprise Risk Management Committee.



The views of this article do not necessarily reflect the views of the Society of Actuaries in Ireland, the Enterprise Risk Management Committee, or the author’s employer. The article was edited by the Communications Subgroup of the Enterprise Risk Management Committee.