Enterprise Risk Management requires a cultural shift, actuaries told

Developing and implementing enterprise risk management (ERM) within a firm is essentially on par with invoking a cultural shift in a company’s operations, actuaries were told at the Casualty Actuarial Society (CAS) annual meeting.Thomas Hettinger, managing director of EMB America LLC, explained that ERM is a process of identifying risk, assessing risk, transferring risk and capitalizing on risk. While many firms are doing this by default, he continued, but few are doing it in a manner where people can study it or critique it.”Guy Carpenter & Company Inc.’s managing director Donald Mango, said that actuaries need to broaden their often-perceived role as collectors and interpreters of data and “further develop their skills as leaders, educators, and communicators, so they can explain the impact ERM will have on the organization.”If done correctly, Mango continued, “ERM will be the hub of risk decision-making, impact planning, pricing, reinsurance buying, capacity allocation, and rating agency interaction.”Mango noted that in developing ERM, actuaries need to create conversation between people in the company who do not talk frequently, says a CAS release.He listed underwriters, IT professionals, and investment managers as examples, and used the example of catastrophe risk as one that impacts not only underwriting losses, but a company’s investments as well.