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September 2012 Bermuda Re/insurance


ERM can help to ensure consistent reporting between entities, clear transparency regarding where capital is allocated and justification for executive decisions based on appropriate measure of capital performance.


Opportunity Firms make money by being able to deliver higher quality, more


innovative or faster-to-market goods, products and services than others in the market. To succeed companies need to build and sustain a competitive advantage.


Risk is why insurance and reinsurance companies exist. However, the


challenge for them is to maximise the potential upside of risk-taking while minimising the potential downside. This realisation, coupled with the recent advancements in organisations’ abilities to manage and evaluate the cost of individual risks, allows boards and senior executives better to appreciate the link between informed risk-taking and competitive advantage.


Technological advances


Data are a key part of any ERM framework. Collating vast quantities of data and ensuring consistency, completeness and accuracy is a significant task. Indeed, in Deloitte’s 2011 Solvency II survey, the majority of insurance company participants listed data management and data quality as a key priority over the next six months. However, there has been considerable advancement in the development of software platforms that have the ability to handle data across front, middle and back office systems. The affordability of these platforms is improving, meaning that the seamless flow of data through the organisation is becoming a reality.


Risk varies inversely with knowledge ERM is all about making strategic and day-to-day business decisions


across the entire enterprise with full awareness of the potential risks and opportunities. Leaders must recognise that the pursuit of value inevitably means exposure to risk and with it opportunities, but also responsibility. In this context, ERM is a set of interconnected capabilities to help enable growth while at the same time facilitating compliance with ever-growing regulatory requirements. The challenge is for firms to use risk to help achieve a competitive advantage.


Figure 1. Risk Intelligence Maturity Model


Leon Bloom is partner, enterprise risk management at Deloitte, Canada. He can be contacted at: lebloom@deloitte.ca


Stephen Kuzyk is principal, enterprise risk services at Deloitte, Bermuda. He can be contacted at: stephen.kuzyk@deloitte.bm


Liz Cunningham is senior manager, actuarial and insurance solutions services at Deloitte, Bermuda. She can be contacted at: liz.cunningham@deloitte.bm


Brett Henshilwood is senior manager, enterprise risk services at Deloitte, Bermuda. He can be contacted at: brett.henshilwood@deloitte.bm


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