The Solvency 2 legislation currently being implemented creates significant challenges
for all European insurers. A risk based approach to the capital calculation and
the regulatory framework is a major departure from that traditionally taken in the
insurance industry. It is intended to provide a harmonised solvency regime across
Europe with a capital requirement better aligned to the risk that an insurer takes
and greater transparency within the industry.
The framework is based around 3 pillars and the approach is to some extent similar
to that adopted with the Basel 2 regulation in the banking sector. The first pillar
focuses on the calculation of the amount of captial that an insurer needs to hold
to adequately cover its risk and requires that an insurer can measure its capital
on a risk basis to a confidence level (or value at risk) of 99.5% over a one year
period (known as the solvency capital requirement or SCR), as well as a lower threshold
(the minimum capital requirement or MCR). The second Pillar relates to the risk
and control environment within the organisation. As well as ensuring the risks within
the firm are recognised, the second Pillar also requires that the senior management
are in control of the risk management process and can demonstrate to the regulator
that this is in fact the case. The third pillar covers disclosure requirements and
will require greater transparency by the insurers both in terms of the risk profile
of the organisation and the calculation methodologies employed in the estimation
of risk and capital.
This creates a number of challenges. The measurement of risk and capital is complicated
and involves integration of data of different risk types including insurance, default,
credit and operational. This data is a mixture of quantitative and qualitative and
will come from many different sources. Even once this data has been integrated and
an estimate for risk and capital calculated, it is essential that this is efficiently
linked to the risk and control environment itself.
RiskSecure meets these challenges. RiskSecure provides senior management the
ability to easily integrate risk data of disparate types to produces an estimate of risk
and capital. Equally importantly, it provides full control of the risk environment
and allows management to demonstrate both internally and to the regulators that
good corporate governance is being practiced and that all of the relevant regulation
is being adhered to.
INTEGRATE RISK
DATA OF DISPERATE TYPES TO PRODUCE AN ESTIMATE OF RISK AND CAPITAL
OBTAIN FULL CONTROL OF YOUR RISK ENVIRONMENT
DEMONSTRATE BOTH INTERNALLY AND TO THE REGULATORS THAT
GOOD COPRORATE GOVERNANCE IS BEING PRACTICED
Credit Monitoring
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ITIL
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