ORSA reports are produced annually by chief risk officers (CROs) for Board members and regulators. They provide the insurer’s own assessment of current and future risks, including a judgement about their ability to respond to potential capital needs.
Initially formulated as part of Solvency II, the ORSA approach has been adopted by a number of other non-EU regulators across the world.
As the regulator’s interest in ORSA has increased, so too has the appetite for the inclusion of greater amounts of data. This however contrasts with the requirements of Board members, who might already have seen relevant data sets and often prefer distilled key messages to focus their decisions.
The LMA’s guidance ‘Keeping the “O” in ORSA’ examines how these reports can be structured in a way that will provide Board members with high-level information to inform risk and capital discussions and decisions, but also provide the level of detail required by the regulator.
Ken Curtis, Finance and Risk Director, LMA, said: “We are supportive of the concept of ORSA. It has created an opportunity to promote a ‘risk and capital culture’ and has enhanced the role of risk management within insurers. It is however critical that it remains each insurer’s ‘own’ assessment of their risk profile and capital requirements, tailored for their business and their Board. It is essential to keep the ‘O’ in ORSA.”
The guidance is available to download here
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