CRO Solvency II report launched
A guide helping chief risk officers navigate Solvency II has been launched by Aon Benfield. The ‘CRO Guide to Solvency II’ is structured around the themes of capital management, risk management and data quality. Key pieces of advice in the guide include:
· Reinsurance remains the best mechanism for mitigating the risks and associated capital charges under Solvency II. Since most firms target a Solvency II ratio substantially above 100%, the effect of leverage on required capital makes reinsurance more cost efficient than raising additional equity in today’s market.
· Making the link between optimising return on capital, managing the volatility of results and delivering within risk appetite is a good way to incentivise senior management to use the results of internal models in strategic decision making.
· Operational risk management should be developed for business rather than for regulatory considerations. Accurate and complete risk information, as well as a good capital model and insurance mitigation programme, can really add value.
Marc Beckers, head of Aon Benfield Analytics for EMEA, said: “The CRO’s responsibility reaches across the three pillars and their role is crucial in shaping the business to be successful under the forthcoming new regime.
“The CRO connects and collaborates with the roles across an insurance company – from board to actuary or catastrophe modeller – that are involved in achieving and embedding regulatory compliance.”