Solvency II
Solvency II: focus on quantitative risk management
As European insurers respond to renewed opportunities, they face the complex challenge to implement the Solvency II directive before October 2012. Solvency II is the updated set of regulatory requirements for insurance firms that operate in the European Union. It demands a
risk management system embedded throughout the organization to manage the risks related to the business processes of an insurer to protect investments. Risk is measured on consistent principles, and capital requirements directly dependent on these principles. The real paradigm shift is in Pillar 2 of Solvency, as insurers must assess, for the first time, the quality of their risk management.
Required: Quantitative Risk Management
The way forward for insurers, as they strive for Solvency II compliance is to embed qualitative risk management throughout their organization. A process-based risk program is the basis for all other risk management programs like credit, market and liquidity risk. Developing such a program is a time consuming project, because the involvement of the entire business is required and the framework must be developed in concert with evolving regulatory requirements. To be prepared on time, it is important that European insurance companies begin building qualitative process-based risk management systems integrated with their quantitative systems.
Best practice approach to Solvency II compliance
Trusted by several hundred customers worldwide, BWise delivers Governance, Risk Management and Compliance (GRC) solutions to European insurance firms. BWise has successfully partnered with European insurance firms to implement risk-based solutions for Solvency. Pillar 2 of Solvency II describes on a high level what an insurer’s framework must look like. Each insurance organization has its own unique business processes, with unique related risks, so organizations must build their own risk management framework, yet still comply with Solvency II Pillar 2.
Added value for all users
Building this system, as required by Solvency II, demands a change in work processes and a risk-based awareness of the business, especially in regards to the processes of each department in the organization. A key aspect to a successful Solvency implementation is the acceptance by users of the changed way of working. In addition, a process-based approach to Solvency II is an effective way to bring risk management to an operational level, and give management more insight in to how to optimize the required solvency margin.
Please click here for more information on the BWise Solvency II Template.
