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FTI Consulting Solutions Paper

U.S. NAIC ORSA - Guidance for Implementation and Creation of Optimal Value

Insurance

July 24, 2015

The Global Insurance Services (GIS) group of FTI Consulting comprises insurance industry experts who support clients with a full range of comprehensive services designed to protect and enhance value—actuarial, enterprise risk management (ERM), regulatory compliance, claims engineering, information technology, litigation support, performance improvement, information quality, intellectual property, e-discovery, strategic communications, and transaction advisory.

GIS has extensive expertise and experience with ORSA and ORSA-related matters; and has developed an ORSA/ERM Integrated Management Framework (IMF) and methodology that leverages enterprise risk management governance and processes in support of achieving NAIC ORSA objectives. GIS capabilities in support of NAIC ORSA include:

  1. Assistance with structuring the GIS framework for ORSA/ERM program management
  2. Assessment and Gap analysis of ORSA and risk management capabilities/readiness
  3. Support for achieving board and senior management involvement, including risk policies, risk committees, and risk reporting to the board and senior management; assessing risk culture, and addressing other critical risk management requirements
  4. ORSA/ERM risk assessments and implementation, including use of the GIS web-based database management tool to identify and manage key risks and controls across the enterprise 
  5. Model validation and assessment—actuarial, economic capital models, market, and credit—and related governance structures
  6. Assistance with satisfying the internal model use test, including preparing stress and reverse stress testing, pricing, reserving, and return on equity and capital allocation 
  7. Assistance with development of risk metrics, measurement and modeling, including valuation and enhancements specifically tailored to individual company needs, but reflective of leading industry standards
  8. Assistance with achieving data quality and IT infrastructure enhancements to assure efficient support of risk management and reporting functions
  9. Assistance with developing risk management processes, including establishing strong linkages between the risk management function and internal auditing in the identification, assessment, response, measurement and control; and reporting of risks throughout the enterprise and, ultimately, to the board
  10. Providing support services such as documentation, training, and peer analysis

Our solutions paper is organized into five sections. Following introductory material, we discuss the structure and components of IMF, since we believe it is important to first understand the role of IMF in implementing and optimizing ORSA. Sections Two and Three provide detailed information about preparing for and implementing NAIC ORSA, as well as discussions covering important technical considerations. Section Four elaborates on the components of IMF as they relate to integration and optimization of ORSA across the enterprise. Section Five highlights selected regulations having related impacts. The Appendix provides three important forms as examples of some of the tools and aids related to IMF.


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