Objective Setting

Question 1

What does the PRA Handbook section on ORSA mention about objective setting?

Answer 1

Risks to an organisation’s objectives:

“the ORSA must take into account:

a firm’s overall solvency needs taking into account specific risk profile, approved risk tolerance limits and the business strategy of the firm.”

“A firm must make the ORSA an integral part of its business strategy and take the ORSA into account on an ongoing basis in its strategic decisions.”

Question 2

What does COSO 2017 say about objective setting?

Answer 2

ERM, strategy and objective-setting work together in the strategic planning process. A risk appetite is established and aligned with strategy, business objectives put strategy into practice while serving as the basis for identifying, assessing and responding to risk.

Question 3

What does the IRM Standard say about objective setting?

Answer 3

Context is about setting the organisation’s strategic objectives.

Question 4

What is the objective setting process?

Answer 4

1. Internal and external analysis;
2. Formulate strategic objectives;
3. Formulate tactical objectives;
4. Formulate operational objectives.

Question 5

What are the challenges with objective setting?

Answer 5

1. Balancing conflicting expectations of a range of stakeholders.
2. The objectives need to be continuously questioned as the internal and external context changes.
3. Staff may be unaware of, misinterpret or disagree with the objectives.
4. An organisation can reduce short term risk exposure by setting achievable objectives but increase exposure by setting overly ambitious objectives.

Question 6

How many steps are there in S&Ps ERM analysis?

Answer 6

5

Question 7

What are S&Ps ERM analysis steps?

Answer 7

1. Risk management culture
2. Risk controls
3. Emerging risk management
4. Risk models
5. Strategic risk assessment