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Mark A. Hofmann

Reinsurers open up about risk management targets: Study

March 20, 2014 - 2:21pm

Risk Management Targets


A new study by Guy Carpenter & Co. L.L.C. shows that most reinsurers are managing capital with metric-based frameworks and are publishing more about their risk management targets than had been in the case in previous studies, the reinsurance broker said Thursday.

The study, “Enterprise Risk Management Benchmark Review: 2013 Update” analyzed the risk management practices and policies of 67 insurers and reinsurers located in Europe, the United States, Bermuda, and the Asia-Pacific region.

“Capital market, legislative and regulatory influences, such as the approaching implementation of Solvency II, are expected to further compel company managements to better recognize and analyze the risks of their enterprises,” said Guy Carpenter in a statement accompanying the analysis.

The study concluded that even though ERM implementation practices are disclosed at higher levels in Europe, “we can observe that ERM practices are increasingly well-integrated within companies' general management practices all over the world.”

It said that the disclosures on ERM governance have already reached an “adequate level” in all markets. The study further noted that attention is shifting toward more technical aspects and a general focus — especially in Europe — on operational risks and capital markets.

“External demands such as regulatory developments, the ongoing sovereign bond crisis and global natural catastrophe events are again showing how critical it is for insurance and reinsurance companies to effectively assess their corporate risks,” said Markus Mueller, Munich-based senior vice president with Guy Carpenter, in the statement. “With a thorough understanding of enterprisewide risk and the integration of this knowledge into the business decision-making process, companies will be better prepared to respond to internal and external questions relating to risk and capital.”

 



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