OSFI.ORSA Flashcards
what is the general role or ORSA?
enhance an insurer’s understanding of the relationship between risk profile and capital needs
does OSFI approve an insurer’s ORSA?
no, but OSFI will review a company’s ORSA as part of its assessment of the company
what is the relationship between ERM and ORSA?
ERM and ORSA should be well integrated so that analysis and results are consistent between them
the 5 key elements or ORSA
RRIMO (urrrrrrgh in my opinion)
- risk identification and assessment
- relate risk to capital
- internal controls and objective review
- monitoring and reporting
- oversight
describe ORSA key element “risk identification and assessment”
identify and assess the materiality of foreseeable and emerging risks
describe ORSA key element “relate risk to capital”
- set Internal Capital Target using stress testing techniques
- must withstand a specified loss without falling below supervisory capital requirements
describe ORSA key element “Internal controls and objective review”
- review for accuracy: integrity and reasonableness
- objective reviewer: internal or external auditor OR skilled professional not involved in ORSA process
describe ORSA key element “Monitoring & Reporting”
annual reports on risk profile and capital assessment
describe ORSA key element “Oversight”
SM should have a good understanding of
- nature of risks
- risk mitigations
- risk management
- capital adequacy
is ORSA process the same for all federal insurers?
key elements are the same BUT
specifics differ by company depending on risk profile, NSC (Nature/Scale/Complexity) of operations
should ORSA be used be set Internal Capital Target?
Yes, an important part of ORSA is to set ICT since ICT considers insurer specific risks
what is the relative importance of quantitative/qualitative aspects of ORSA?
equally important
regarding ORSA key element #2, relating risk to capital, identify possible approaches to calculating ICT
- complex internal model: for complex risks
- simple model: with conservative assumptions
- qualitative: includes expert judgement for difficult to quantify risks
describe similarities between DCAT and ORSA
- both are concerned with risk identification and control
- both are concerned with capital requirements
- both are submitted to BoD and directors
describe differences between FCT and ORSA (answer in FCT1)
1) Guidelines
- FCT: uses CIA SOPs?
- ORSA: use OSFI guidelines
2) Methods:
-FCT: quantitative
- ORSA: quantitative and qualitative
3) reporting
- FCT: by AA
- ORSA: management responsibility
