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Interview With Arya Yarpezeshkan, Group Chief Risk Officer, The Navigators Group, Inc.
NEW YORK, NY --(Marketwired - February 11, 2016) - In recent years, insurance organizations have scrambled to comprehend a wave of new ORSA requirements and the full scope of what the ORSA reporting process should entail, amid a concrete ERM framework. As we enter 2016, the focus shifts to the even bigger task of providing continual assessments of organizational capabilities, and successfully overcoming the wide variability in ORSA models. It is important to benchmark initiatives such as the pilot programs and a strong capital model framework.
Arya Yarpezeshkan, Group Chief Risk Officer at The Navigators Group, Inc., recently shared with marcus evans how his company aligns ORSA to their risk strategy:
Internally, how do ORSA Sections play a part in the decision making processes for the company? And which ones are you currently focusing on?
AY: Section I of the ORSA focuses on aspects of risk and appetite and tolerance statements, which is foundational to aiding our business in the decision-making process. By establishing our risk appetite, we clearly articulate and disseminate the guideposts of how much risk we are willing to take in pursuit of our overall strategy.
Section II focuses on quantification, sensitivity analysis and scenario testing, which we employ at various times in our business planning cycle and new business reviews. By understanding the sensitivities to our portfolio, we are more suited to provide our business leaders with additional insights to drive profitability, whether it be to mitigate potential risk or exploit trends noted through the analyses.
Finally, Section III of the ORSA focuses on capital adequacy, prospective business and capital planning. Capital adequacy is critical to an insurance company's sustainability, and is a factor in material business decisions.
Why is it important to align ORSA to your business objectives and risk strategy? What are some of the key components to this strategy and alignment?
AY: Strategy and risk go hand in hand. To effectively develop our risk strategy, we must consider several factors such as our comfort level with volatility, capital and liquidity as it pertains to our internal and external stakeholder expectations. After we evaluate these considerations, we are able to define our strategic objectives. Upon establishing our objectives, we can then identify risks and set our risk appetite and strategy. By following this process we are able to ensure alignment between our internal and external stakeholder expectations, our objectives and our risk strategy.
The ORSA process helps bring those elements together in a cohesive framework which can be communicated both internally and externally.
What type of reporting structure do you use for ORSA and ERM?
AY: The ORSA is submitted to the group-wide Enterprise Risk Management Steering Committee and the Board of Directors at least annually and if significant changes in operations occur.
How do the decision makers and board members of your enterprise play a role in risk related decisions?
AY: Navigators utilizes a quarterly reporting and committee structure to ensure continuous dialogue concerning risk issues facing our organization. There are functional risk sub-committees, and the group-wide Enterprise Risk Management Steering Committee and Chief Risk Officer report regularly to the Board of Directors.
What do you see changing in the ORSA process over the next few years?
AY: I foresee the regulators reviewing several ORSAs and selecting a few key best practices as well as defining risk metrics that they would like all ORSA filers to adopt so that there is consistency in submissions and the regulator can confidently compare risk management practices across the industry.
Join Arya at the 3rd Annual ORSA & ERM Conference, April 20-21, 2016 in New York, NY. View the conference agenda to check out Arya's case study topic. For more information, please contact Tyler Kelch, Digital Marketing Manager, marcus evans at 312.894.6310 or Tylerke@marcusevansch.com.
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