OSFI.ORSA Flashcards
What is the goal of ORSA
enhance an insurer’s understanding of the relationship between risk profile & capital needs
Identify the 5 key elements of ORSA
IMORR
Risk identification & assessment
Relate risk to capital
Oversight
Monitoring & reporting
Internal controls & Objective review
Describe the ORSA key element ‘risk identification & assessment’
identify & asses risks that could have a MATERIAL impact on the financial health of the insurer
Describe the ORSA key element ‘relate risk to capital’
- Set internal capital target using stress-testing techniques
- each company determines its own potential risks and the capital it should hold for each of them, if any
Describe the ORSA key element ‘oversight’
Senior management reponsability: should have a good understanding of:
- nature and significance of the risk exposures
- risk mitigants
- risk management methods
- capital adequacy
Describe the ORSA key element ‘monitoring & reporting’
annual reports to board of directions & senior management on risk profile & capital management
Describe the ORSA key element ‘internal controls & objective review’
Review for: accuracy, integrity, reasonableness
Objective reviewer: internal or external auditor OR skilled professional not involved in the ORSA process
Is ORSA process the same for all federal insurers
No. ORSA is an internal process assessment, allows insurer to enhance understanding of the relationship between its risk profile and capital need. ORSA is tailored to the size, scale and complexity of operations of the insurer
Similarities between FCT and ORSA
- both consider risk identification & control
- both are concerned with capital available versus capital required
- both consider base & adverse scenario
Differences between FCT and ORSA
- FCT follows CIA SOPs, ORSA use OSFI guidelines
- FCT only uses quantitative methods, ORSA uses both qualitative and quantitative methods
- AA is responsible for FCT, management is responsible for ORSA
