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The Actuary The magazine of the Institute & Faculty of Actuaries

Towers Perrin announces results of global ERM survey

Towers Perrin has completed its 2008 Global Enterprise Risk Management survey, garnering responses from more than 350 senior insurance executives, making it the largest ERM survey of the insurance industry. Its key findings were:
>> Embedding ERM into the business is proving to be a significant challenge. Many companies are looking to use ERM in performance management and decision making
>> Size is an issue. Larger insurers are more advanced in implementing ERM. A total of 40% of larger companies are using economic capital in product design and pricing, with another 42% looking to do so within two years
>> European insurers are better positioned in key aspects such as EC implementation and decision making. Such capabilities are expected to lead to lower capital requirements and comparative advantage under Solvency II
>> Respondents said that implementing ERM had led to key changes in aspects such as risk strategy and appetite, asset strategies and product pricing
>> Capital adequacy standards are emerging. The general shift is towards a one-year VaR approach
>> Operational risk is an area of weakness. Only 7% of respondents believe they have adequate capability in place with 37% saying that further work is required.

Further information can be found at www.towersperrin.com