The system of governance is the result of the assembly of various blocks.

We help you to fit these different blocks together, by order of priority, as well as the process of communication between them. In the end, you have a system of coherent governance integrating your Risk Management – allowing you to assess, control and mitigate them in the full knowledge of all the facts.

In a synthetic form, we define the system of governance as being the establishment of 4 key functions, 2 mechanisms and 1 process, namely:

  • The risk manager, the actuarial role, the internal auditor, and compliance;
  • 1 Risk Management system and 1 internal control system;
  • 1 ORSA process

Through the system of governance, the company must be able to answer the following questions:

  • What risks does our company face? Risk Profile
  • How much risk are we willing to take? Risk appetite
  • Who is responsible for the management of risks? Responsibilities
  • How can we ensure that there will be no surprises? Internal Control
  • What are my financial and non-financial resources? Risk capacity
  • What to do in the case of an unexpected event? ORSA + Contingency plans, scenarios

Risk Profile

The establishment of a risk profile helps to:

  • Identify risks
  • Weigh up each risk based on strategic and financial objectives (= assess the risks)
  • Identify the correlations between families of risks within the company
  • Identify concentrations of risk as well as the mitigation techniques of risk
  • Report on the identification and evaluation of risks through a comprehensive risk      register

Each company defines its classes of risks and highlights the major risks in which situation scenarios will be defined. This risk register then serves as a basis for the risk management system and should be documented and updated regularly.

Appetite for risk

The appetite for risk is defined as the amount of risk that a company is ready to take in order to obtain the appropriate or necessary yields, or even the total impact of the risks that a company is ready to accept in the pursuit of its strategic objectives.

To achieve this appetite, we often rely on the following dimensions:

  • The value of the company, the net asset value (NAV)
  • The solvency, the solvency ratio
  • The profitability, the combined ratio (non-life)
  • The liquidity, in % of technical reserves
  • The reputation

Thus, for example, the company will have as objective a strategic growth of the NAV of 5% per year but it can only accept 1 year in 10, growth is limited to 1%. The development of the appetite at the risk will therefore be the strategic business plan of the company.

ORSA Process

The objective of the ORSA process is to:

  • Assess if the risks are properly identified and controlled
  • Ensure a perfect match between the profile of the risks incurred, the company’s capacity to absorb them and its appetite for risk

The company must therefore be capable of delivering a prospective analysis of the company’s own funds and demonstrate that it can mobilise the necessary capital in order to satisfy the need in capital – represented by the margin of solvency throughout the period of strategic planning.

We must therefore develop and research a large number of future scenarios (defined in function of the most significant risks), in order to scale the risk parameters and compare the different risk margins as well as the needs in terms of respective capital. We are then required to take recapitalisation measures or risk mitigation if necessary. We are able to conclude if the tolerance limits are exceeded and if measures must be taken.