Today not many insurance can claim their Stress Test report is credible enough to base their management strategy on. Add to this the governance and workflow for each risk type, ensuring modelling processes and risk calculations are running on time and based on validated data, insurers can feel confident that ongoing compliance and supervisory review will be efficient. Having all this is in one proven solution eases the stress of bringing about the positive change intended by the Solvency regulations. Business Benefits eFrame® for Insurance Solvency II Stress Testing enables a centralized approach to stress testing that is operationally efficient, overcoming the cost and resource issues that hinder a Insurance’s ability to drive their investments in a prudent way. A dedicated framework, and working with assumptions that are in line with the actual stressed situation faced by the organisation and with the models actually used for the production of regulatory submissions, gives confidence in the results and subsequent report. As such, the results of the Stress Test and ad-hoc scenario analyses are respected in the business and action is taken on the reports. Crucially, re-running stress tests to see whether restructuring in light of previous insights has created greater resilience, helps make and explain executive management decisions.

1. eFrame®
for Insurance Solvency II
Stress Testing
One-Click Stress Testing for Insurers
www.secondfloor.com

2. eFrame®
for Insurance Solvency II
Stress Testing
One-Click Stress Testing for Insurers

3. One-Click Stress Testing Barriers to firm-wide
for Insurers stress testing
The ability to perform regular stress While many insurers are capable of
tests is an important tool in an insurer’s risk conducting ad-hoc stress tests within individual
management toolbox. By modelling stress business units, challenges arise when attempting
scenarios and applying them across the entire to apply a streamlined stress testing methodology
portfolio, insurers can gain valuable insight into across the entire enterprise.
firm-wide risk exposure, enabling them to make These challenges are both business and technical
appropriate strategic decisions. in nature, and include:
Increasingly, stress testing is not just an internal Business Challenges
risk management tool, it’s also a report requested
by regulatory bodies seeking to improve their • The language of stress testing is not yet
understanding of risk exposure across the entire familiar throughout organisations. Converting and
insurance system. One-off stress tests, such as communicating stress test results into business
those carried out by EIOPA, are likely to become intelligence for strategic decision making is an
more frequent as regulators seek to mitigate or immature capability in many firms
avoid potential industry-wide crises. • Portfolio complexity – many insurers deal
in multiple insurance types, each with its own
assumptions about stress situations and its own
calculations to determine the effect of a shock on
the portfolio
• Lack of resources – it is hard to dedicate
time and effort to running a firm-wide stress test
when there are so many other demands on staff
time – particularly in the run-up to Solvency II
compliance
• Repeatability – today, most stress testing
is done as a one-off, manual exercise, often in
response to a regulatory request. There is a lack
of processes and tools to make stress testing
a regular, repeatable and comparable exercise
that can really add value to risk-related decision
making
Technical Challenges
• System complexity – different functional
areas of the business use different systems to
calculate, analyse and report risk, making it hard
to reconcile the results and consolidate them into
an accurate, firm-wide report
• Data inconsistency – insurers operating in
multiple geographies may have different ways
of classifying similar products and entities,
requiring an initial classification exercise to
ensure that definitions are used consistently
across the business (or at least to identify where
inconsistencies exist and flag them to regulators
and senior management)
• Auditability – when results from different parts
of the business are consolidated into a single
stress test report, it’s easy to lose track of who
supplied which data, which assumptions were
used and how it has been validated, undermining
confidence in the report’s integrity

4. Regular, firm-wide stress • Integration with existing systems – trigger
calculations automatically in source systems
testing at the click of a and import results directly from Excel, or use
button pre-built connectors to import data from a wide
range of finance, modelling, risk and compliance
The solution works with existing systems, rather
applications
than replacing any software running in the current
environment. It offers major benefits to insurance • Powerful reporting capabilities – three styles
companies looking to standardise and automate of reporting help firms to meet regulatory and
stress testing for improved compliance and a management requests for stress test information:
more strategic approach to risk management.
• Standard reports: eFrame® comes with a suite
Key features include: of standard, out-of-the-box reports, based on
common internal and external requirements
• Enterprise visualisation – discover, map
and visualise the current business environment • Custom reports: SecondFloor consultants can
(including systems, processes, roles and implement additional custom reports at your
responsibilities) to understand what needs to request
be done to introduce a firm-wide stress testing
• Ad-hoc reporting: eFrame® enables users to
process
run ad-hoc queries against the underlying data
• Interactive strategic dashboard – to meet one-off information requests
communicate the impacts of stress scenarios on
• Fixed-price, fixed-time implementation –
the firm’s risk appetite, tolerance and regulatory
SecondFloor consultants follow a standard
thresholds
process when implementing the solution, so you
• Taxonomy-driven data modelling – create a know upfront exactly how long the project will
data model with standard, firm-wide definitions take, what it will involve, and how much it will cost
for every data point required for the stress test
report. This model can be aligned with existing
risk models, including Solvency II Standard
Formula, for complete consistency
• Automated workflow – set up responsibilities
and a process flow for supplying and validating
data for stress test reports. Alerts and
escalations ensure data is supplied and validated
in a timely way
Capital calculation
Consolidation
Capital requirement /SCR/ MCR
Calculators
Stress Test Actuals vs Appetite
ESG Scenarios / Risk factors Capital
Model parameters
eFrame® Liquidity
Narratives For Insurance Reporting
Solvency II
Data Stress Testing Stress test EIOPA reports
Counterparty ratings QRT’s incl. CAT Risk
ALM
TIME WINDOW
DRIVEN
REPORTING
PROCESS
CONTROL &
AUDITABILITY
Other
Operational losses
Financial data eFrame® for Insurance
Data Calculators Solvency II Stress Testing
Stressed RP values
is a powerful and scalable
Stressed MCEV
software solution that allows
Liquidity Ratios
insurers to conduct regular,
audited, firm-wide stress
tests at the click of a button.

5. Benefits
Benefits of using eFrame® for firm-wide stress Key Features
testing include:
• Interactive strategic dashboard
• One-click testing – a single click in eFrame®
triggers the process to generate a complete, • Works with existing systems
firm-wide Stress Test report within a specified • Fully traceable and auditable
timeframe
• Powerful reporting solution
• Works with existing IT environment –
eFrame® collects, validates and consolidates • Sensitivity analysis and calibration
data from existing calculation and reporting
systems, so business can continue with no
disruption
• Automated process – eFrame® automates
much of the stress test reporting process, Key benefits
triggering calculations in the relevant source • Valuable tool for risk-related decision making
systems and collating and consolidating the
results • un regular, accurate stress tests at the
R
click of a mouse
• Process efficiency – where manual
intervention is required, for example to validate • ramatically reduce the time, cost and effort
D
submitted data, eFrame® orchestrates this of stress testing
through a workflow-based alerting and escalation
• et risk analytics that senior management
G
system, which creates an audit trail and ensures
can trust
that process bottlenecks do not occur
• Repeatability – once eFrame® is installed, • peed up regulatory, statutory and
S
management reporting
stress tests and reverse stress tests can be run
on a regular basis with minimal disruption, using • Supports ORSA requirement of Solvency II
the same assumptions or new assumptions
modelled in eFrame®
• Valuable risk analytics – regular, comparable
firm-wide stress tests can be an invaluable tool
for risk-based decision making and adjusting risk
strategy over time
• Faster reporting – eFrame® can generate a Find out more
firm-wide stress testing report in a matter of days,
rather than the weeks that firms currently spend To learn more about introducing a repeatable,
manually collecting, collating and reconciling auditable, firm-wide stress testing process with
individual reports eFrame®:
• Full audit trail – eFrame® preserves a contact us on +31 88 26 35 463,
record of every action taken to create a report, email us at info@secondfloor.com,
every calculation made in the production of the
or visit our website at www.secondfloor.com
figures, and every source system supplying the
underlying data
Chosen by the world’s leading
insurers
eFrame® is being used for Solvency II preparation
and reporting by some of Europe’s most complex,
multi-country, multi-line insurers.

6. For more details please contact
SecondFloor.
About SecondFloor
SecondFloor helps firms to comply
and produce regulatory information
efficiently, consistently. Companies
that turn to SecondFloor’ solutions
benefit from timely, complete, accurate,
traceable, auditable and repeatable
reports and analytics. Facilitating stress
testing, economic capital calculations,
and regulatory reporting in complex
environments are key elements of
SecondFloor’s credentials that have
established it as a successful enabler
of business analytics. eFrame®,
SecondFloor’s software application,
reflects best practice approaches and
project accelerators learned with clients
during years of experience. SecondFloor
is also an IBM risk analytics reseller.
Request a full demonstration
Would you like to have a personalized
demonstration of the eFrame® for
Insurance Solvency II Stress Testing?
Please contact us at
info@secondfloor.com or simply visit
www.secondfloor.com