A COUPLE of weeks ago, the industry was invited to a discussion on the future imposition of yet another compliance requirement to which the insurance industry would be subjected. The Insurance Commission, under the guidance of the World Bank via a technical assistance arrangement, conducted a briefing on ORSA, otherwise known as the own risk self-assessment process and reportorial requirements.

The ORSA is an internal process undertaken by an insurer or an insurance group to assess the adequacy of its risk management vis-à-vis its current and prospective solvency positions as exhibited under normal and stress scenarios. ORSA is supposed to help firms understand which areas of their enterprise risk management (ERM) framework they would need to look into and develop further. Companies abroad which have already adopted this discipline have indicated that the difficulty lies not so much with ORSA itself, but rather with the process or needed calculations that feed into it. These calculations assume that the company is cognizant of and accepts its internal risk appetites and risk tolerances, which by themselves may be moving targets.

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