Solvency II - Programme Assurance


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Solvency II - Programme Assurance

  1. 1. Solvency II A Practical Way of Delivery
  2. 2. Gain-Line & Solvency II Solvency II is the biggest ever exercise in bringing together insurers and re-insurers under one regulatory regime Solvency II Programme Slide <ul><li>Solvency II is a set of principles and guidelines leading to best practice in risk management; </li></ul><ul><li>It is an Enterprise wide initiative that will impact all areas of the business; </li></ul><ul><li>Early adopters are helping Lloyd’s and the FSA set the bar for what is required in the market; </li></ul><ul><li>We can’t give you ‘ The Answer ’, but only a framework to help provide ‘ An Answer ’ based on decisions your business need to make; </li></ul><ul><li>Numerous approaches are being adopted across the market and it is not a case of ‘ one size fits all ’; </li></ul><ul><li>Resources will be scarce and the deadline is unlikely to move; </li></ul><ul><li>The range and diversity of insurance operations means that a Solvency II solution will vary from company to company; </li></ul><ul><li>The eventual solution in each case will require a detailed initial assessment and a range of inputs from a number of different disciplines. </li></ul><ul><li>Gain-Line is a consortium of companies formed specifically to provide clients with focused Solvency II expertise and resources; </li></ul><ul><li>The details of the consortium members are contained within the Appendix. </li></ul>The Gain-Line Consortium
  3. 3. CEO CA CIO CRO CFO Stakeholder Requirements There are many stakeholders with differing priorities that need to be integral to the Solvency II Programme Solvency II Programme Slide Key Objectives:- Chief Actuary – centralised and consistent modelling approach for all actuarial users for realistic ‘what-if’ and scenario planning; Chief Risk Officer – enterprise wide consistent risk management standards and transparent risk modelling approach; Chief Information Officer – robust IT governance with scalable modelling tools and techniques, with consistent approach to data controls and architecture; Chief Financial Officer – faster reporting timetable with consistent approach to financial and management information; Chief Executive Officer – enhanced business performance through risk based decision making and efficient allocation of capital.
  4. 4. Solvency II Components Programmes will be challenged to align a variety of different functions as Solvency II will impact all elements of the Business Slide Solvency II Programme (including Programme Office) Governance, Compliance & Comms Balance Sheet & Portfolio Management Governance & Oversight Documentation, Comms & Training External Reporting Standard Formula Portfolio Management Calculation Kernel Technical Provisions Assets & Asset Liability Management Internal Model/Risk Management ORSA & the 6 Tests Data Quality & Governance Solvency II Data Repository IT Systems & Processes Risk Management Systems & Data
  5. 5. ERM under Solvency II Key Solvency II Principles Solvency II Programme Slide <ul><li>Clear responsibility at senior level for risk management ensuring its use in managing the business, including influence on key decisions; </li></ul><ul><li>Full integration of risk and capital management – must be embedded sufficiently to pass the Use Test; </li></ul><ul><li>The ORSA is an integral part of managing the business against the chosen strategy and strategic decision making; </li></ul><ul><li>Risk appetite is clearly articulated and widely understood as the parameters to manage the business – changes are proactive and based upon the risk and capital framework; </li></ul><ul><li>The risk and capital framework is clearly documented and evidenced in advance of its use. </li></ul>
  6. 6. “ Systemic” / Interdependent Risk Governance E.g.: Risks & Controls Financial markets risk Review & Assurance Currency fluctuations Quantification Market changing events <ul><li>Scenario Analysis </li></ul><ul><li>Contingency Planning </li></ul><ul><li>- Operational </li></ul><ul><li>Market changing events </li></ul><ul><li>Emerging Risk Management </li></ul><ul><li>Linkage to Strategy </li></ul>Regularly updated, clearly documented Disclosure & Reporting Pillar 1 MCR, SCR Capital Model etc Pillar 3 Disclosure & Market Discipline Pillar 2 ORSA & Supervisory Review Regulatory Risk Governance Risks & Controls Review & Assurance Quantification Group & Capital Risk Governance Risks & Controls Review & Assurance Quantification Liquidity Risk Governance Risks & Controls Review & Assurance Quantification Operational Risk Governance Risks & Controls Review & Assurance Quantification Market Risk Governance Risks & Controls Review & Assurance Quantification Credit Risk Governance Risks & Controls Review & Assurance Quantification Insurance Risk Governance Risks & Controls Review & Assurance Quantification The Risk Management Framework Slide <ul><li>ERM Framework Elements </li></ul><ul><li>Governance </li></ul><ul><li>Accountability </li></ul><ul><ul><li>1 st line: Line Management </li></ul></ul><ul><ul><li>2 nd line: Review & Challenge </li></ul></ul><ul><ul><li>3 rd line: Independent assurance / challenge </li></ul></ul><ul><li>Structure </li></ul><ul><li>Decision making (inc. Delegation) </li></ul><ul><li>Risks & Controls </li></ul><ul><li>Identification & Assessment </li></ul><ul><li>Systems & controls i.e.: </li></ul><ul><ul><li>Policy and approach </li></ul></ul><ul><ul><li>Core processes & systems </li></ul></ul><ul><ul><li>Risk appetite set </li></ul></ul><ul><li>Review & Assurance </li></ul><ul><li>MI / KPI’s </li></ul><ul><li>Scenario analysis & stress testing </li></ul><ul><li>Review & challenge </li></ul><ul><li>Independent assurance </li></ul><ul><li>Quantification </li></ul><ul><li>Base Level (solvency / regulatory) </li></ul><ul><li>Economic </li></ul><ul><li>Stress testing / tolerance levels </li></ul><ul><li>Continually refined risk appetite </li></ul>
  7. 7. Project QA & Review In our experience, it is often prudent to perform an independent programme/project assurance review to ensure the programme/project is still on target to deliver Solvency II Programme Slide <ul><li>The main areas of the review are as follows:- </li></ul><ul><ul><li>How the programme/project is being undertaken? </li></ul></ul><ul><ul><ul><li>We will review whether your programme/project is being appropriately and effectively governed and managed. </li></ul></ul></ul><ul><ul><li>What the programme/project is doing? </li></ul></ul><ul><ul><ul><li>We will review the scope and approach across the programme/project to ensure that they are appropriate and aligned with the direction of the market and our interpretation of the Directive. </li></ul></ul></ul><ul><li>The key objectives of this programme/project review will be to:- </li></ul><ul><li>Comment on and challenge the strategic decisions and approaches being taken within the programme/project; </li></ul><ul><li>Identify where there are weaknesses in, and improvement opportunities for, the overall programme/project; </li></ul><ul><li>Provide advice and recommendations on how to remedy problems and make improvements. </li></ul>
  8. 8. Project QA & Review Approach The approach is defined in two, distinct phases Solvency II Programme Slide <ul><li>Phase I – Initial Analysis Phase (1-2 weeks dependent upon the size and complexity of the programme/project) </li></ul><ul><ul><li>Desk based review of the programme/project documentation and face-to-face interviews with the key members of the programme/project. The focus will be on the overall programme/project, particularly the scope and approach to structure and resourcing. At the end of this stage, the initial observations will be discussed with your key programme/project members and highlight areas where we think improvements or changes may be required. Deliverable : Initial Findings Report </li></ul></ul><ul><li>Phase II – Review and Challenge Phase (2-6 weeks dependent upon the size and complexity of the programme/project) </li></ul><ul><ul><li>Based on Phase I, we will sit down with the key members of your programme/project and agree specific areas where we believe Phase II should be focused. We will jointly decide whether we continue on a more generic review or whether to focus in on some specific areas. During this Phase, we will interview workstream leads and hold workshops to get a better understanding of the approach the programme/project is taking. Where we identify specific areas where improvements could be made, we will refer to our existing network of Solvency II experts to ensure best practice is being adhered to. Deliverable : Detailed Recommendations Report </li></ul></ul>
  9. 9. <ul><li>The Gain-line Consortium </li></ul><ul><li>Member Companies </li></ul>
  10. 10. <ul><li>Magellan’s Proposition is based on deep Project & Programme Management skills within this sector:- </li></ul><ul><ul><li>Specific Insurance experience (client references are available); </li></ul></ul><ul><ul><li>Extensive Project & Programme Management experience within this environment with the Management Team coming from Big-4 consultancies and senior operational roles within industry; </li></ul></ul><ul><ul><li>A wide range of programme services, including strategy definition, project and programme management, project delivery and QA; </li></ul></ul><ul><ul><li>An innovative approach to delivering programme services; </li></ul></ul><ul><ul><li>A collaborative approach to project delivery which has delivered in excess of £30m of savings in the programmes we have worked on with our clients. </li></ul></ul>Magellan Consultancy Services Magellan are an independent management consultancy focussing on programme management and project delivery Slide
  11. 11. <ul><li>JMR’s Proposition is based on the provision of experienced technical resource who have skills within this sector:- </li></ul><ul><ul><li>Specific Insurance experience (client references are available); </li></ul></ul><ul><ul><li>Extensive analysis, design and modelling skills within this environment having delivered individual assignments and fixed price projects for data migration; </li></ul></ul><ul><ul><li>A strong network of associates that that can join a team to deliver specific assignments; </li></ul></ul><ul><ul><li>Willing to work on flexible commercial models; </li></ul></ul><ul><ul><li>A collaborative approach to project delivery with a ‘can do’ attitude; </li></ul></ul><ul><ul><li>A strong focus on clients requirements and delivery. </li></ul></ul>JMR JMR are an independent software services and solutions company that has been providing quality technical resource for 20 years Slide
  12. 12. Hillway Consulting Hillway Consulting is an independent organisation focusing on operational and management issues in the London insurance market Hillway Consulting Slide <ul><li>Hillway Consulting has:- </li></ul><ul><ul><li>Over 30 years experience in the London Insurance market; </li></ul></ul><ul><ul><li>Operational and management experience in both active and run-off environments with particular knowledge of underwriting, claims and reinsurance operations; </li></ul></ul><ul><ul><li>Experience at Board Level in regulated environments and in working with regulators; </li></ul></ul><ul><ul><li>Excellent network and contacts within the UK and overseas; </li></ul></ul><ul><ul><li>First hand experience of capital markets, risk and capital modelling; </li></ul></ul><ul><ul><li>Experience in corporate formations, restructuring and M&A in both the direct and reinsurance markets. </li></ul></ul>
  13. 13. <ul><li>Summary </li></ul><ul><ul><li>Key sectors; Insurance, Retail Banking, Investment Banking and Big 4 Consulting and Strategy; </li></ul></ul><ul><ul><li>Market discipline; Credit, Market and Operational Risk, Solvency II, Liquidity & Capital Management, Basel II, Economic Capital, Quantitative and Risk Strategy; </li></ul></ul><ul><ul><li>We typically place Senior Managers, Directors, Programme Directors & Managers, Head’s of and Project Managers; </li></ul></ul><ul><ul><li>We operate a search methodology whether working contingently or retained supported by a dedicated research function providing detailed market mapping and ensuring we stay in regular contact with our candidate community/key people. </li></ul></ul>CirclePeople Circle People are a boutique executive search firm operating across the FS Risk Management community Slide