WIN Magazine - Fall 2017 - 31

FEATURE

8-MINUTE READING TIME

MANAGEMENT

Gauging RISK,
reaping REWARD

©ISTOCK.COM/THEMACX

Can wholesalers benefit from implementing an
enterprise risk-management framework?
by JOSEPH F. MORRIS

O

VER THE LAST FIVE
years, rating agencies
and regulators have
been requiring property and casualty insurance companies of all
sizes to implement an Enterprise Risk
Management (ERM) framework. The
belief is that insurance companies that
implement a risk-aware culture and have
a systematic approach to identify, measure and monitor their key risks will
sustain a consistent level of operating
profitability, which will ensure the company has adequate capital to achieve
its long-term strategic goals. But what
about wholesale insurance brokers and
managing general agents? Can these
entities also benefit from implementing an ERM framework?
The answer, of course, is yes. All financial and non-financial, public and private

entities have realized significant benefits
from implementing an ERM framework.
As insurance wholesalers have expanded
and risks related to technology, regulation, carrier appetite change and various
other risks have become more complex,
there is quantifiable value to implementing an ERM framework.
The purpose of this article is to define
what an ERM framework is and offer
approaches to implementing an ERM
framework for a wholesale insurance
broker or managing general agent.

WHAT IS AN ERM
FRAMEWORK?
An ERM framework is a systematic process to identify, measure and manage
the key risks of an entity. It is governed
by an entity's board of directors, managed by its senior officers and applied in
a strategy setting across the enterprise.

COMPONENTS OF AN
ERM FRAMEWORK
* Establish a risk-aware culture.
* Identify, measure, manage and
mitigate key risks.
* Measure enterprise risk using a
capital model and forecast future
capital levels including stress
testing the company's key risks
to ensure that the company has
a sufficient level of current and
prospective capital.
A properly implemented ERM framework can produce a number of benefits
including to:
* Ensure the company has adequate
capital to achieve its long-term
strategic goals
* Sustain a consistent level of EBITDA
or operating profitability
F A L L 2017 | 31


http://www.ISTOCK.COM/THEMACX

Table of Contents for the Digital Edition of WIN Magazine - Fall 2017

Do Hurricanes Have a Silver Lining?
Underwriting Marijuana
The Cyber Insurance Conundrum
Writing Data Security Into Law
Gauging Risk, Reaping Reward
Simply Seamless
Moving to the Cloud: 3 Migration Strategy Models and the 6 R’s.
In the WIN-NER’s Circle
WIN Magazine - Fall 2017 - Intro
WIN Magazine - Fall 2017 - bellyband1
WIN Magazine - Fall 2017 - bellyband2
WIN Magazine - Fall 2017 - cover1
WIN Magazine - Fall 2017 - cover2
WIN Magazine - Fall 2017 - 3
WIN Magazine - Fall 2017 - 4
WIN Magazine - Fall 2017 - 5
WIN Magazine - Fall 2017 - 6
WIN Magazine - Fall 2017 - 7
WIN Magazine - Fall 2017 - 8
WIN Magazine - Fall 2017 - 9
WIN Magazine - Fall 2017 - 10
WIN Magazine - Fall 2017 - 11
WIN Magazine - Fall 2017 - Do Hurricanes Have a Silver Lining?
WIN Magazine - Fall 2017 - 13
WIN Magazine - Fall 2017 - 14
WIN Magazine - Fall 2017 - 15
WIN Magazine - Fall 2017 - 16
WIN Magazine - Fall 2017 - Underwriting Marijuana
WIN Magazine - Fall 2017 - 18
WIN Magazine - Fall 2017 - 19
WIN Magazine - Fall 2017 - 20
WIN Magazine - Fall 2017 - 21
WIN Magazine - Fall 2017 - 22
WIN Magazine - Fall 2017 - 23
WIN Magazine - Fall 2017 - The Cyber Insurance Conundrum
WIN Magazine - Fall 2017 - 25
WIN Magazine - Fall 2017 - Writing Data Security Into Law
WIN Magazine - Fall 2017 - 27
WIN Magazine - Fall 2017 - 28
WIN Magazine - Fall 2017 - 29
WIN Magazine - Fall 2017 - 30
WIN Magazine - Fall 2017 - Gauging Risk, Reaping Reward
WIN Magazine - Fall 2017 - 32
WIN Magazine - Fall 2017 - 33
WIN Magazine - Fall 2017 - 34
WIN Magazine - Fall 2017 - 35
WIN Magazine - Fall 2017 - Simply Seamless
WIN Magazine - Fall 2017 - 37
WIN Magazine - Fall 2017 - Moving to the Cloud: 3 Migration Strategy Models and the 6 R’s.
WIN Magazine - Fall 2017 - 39
WIN Magazine - Fall 2017 - In the WIN-NER’s Circle
WIN Magazine - Fall 2017 - 41
WIN Magazine - Fall 2017 - 42
WIN Magazine - Fall 2017 - cover3
WIN Magazine - Fall 2017 - cover4
WIN Magazine - Fall 2017 - outsert1
WIN Magazine - Fall 2017 - outsert2
WIN Magazine - Fall 2017 - outsert3
WIN Magazine - Fall 2017 - outsert4
https://www.nxtbook.com/naylor/AMGQ/AMGQ0118
https://www.nxtbook.com/naylor/AMGQ/AMGQ0417
https://www.nxtbook.com/naylor/AMGQ/AMGQ0317
https://www.nxtbook.com/naylor/AMGQ/AMGQ0217
https://www.nxtbook.com/naylor/AMGQ/AMGQ0117
https://www.nxtbook.com/naylor/AMGQ/AMGQ0416
https://www.nxtbook.com/naylor/AMGQ/AMGQ0316
https://www.nxtbook.com/naylor/AMGQ/AMGQ0216
https://www.nxtbook.com/naylor/AMGQ/AMGQ0116
https://www.nxtbook.com/naylor/AMGQ/AMGQ0415
https://www.nxtbook.com/naylor/AMGQ/AMGQ0315
https://www.nxtbook.com/naylor/AMGQ/AMGQ0215
https://www.nxtbook.com/naylor/AMGQ/AMGQ0115
https://www.nxtbook.com/naylor/AMGQ/AMGQ0414
https://www.nxtbook.com/naylor/AMGQ/AMGQ0314
https://www.nxtbook.com/naylor/AMGQ/AMGQ0214
https://www.nxtbook.com/naylor/AMGQ/AMGQ0114
https://www.nxtbook.com/naylor/AMGQ/AMGQ0413
https://www.nxtbook.com/naylor/AMGQ/AMGQ0313
https://www.nxtbook.com/naylor/AMGQ/AMGQ0213
https://www.nxtbook.com/naylor/AMGQ/AMGQ0113
https://www.nxtbookmedia.com