A fresh take on risk and valuation
We keep moving forward, opening
new doors and doing new things,
because we are curious, and curiosity keeps
leading us down new paths.
29.01.2021
A Practical Guide for Insurers to Incorporate Climate Risk in Their Own Risk and Solvency Assessments (ORSA)

Climate change poses a serious risk for society and for (re)insurers, with the harmful impact of global warming already being visible. Without further international climate action, global average temperatures and the associated physical risks will continue rising, resulting in increased underwriting risk of insurers, impacting asset values, and challenging their business strategies. On the 5th October 2020, the EIOPA has published a consultation paper on the use of climate change risk scenarios in the ORSA in the form of a draft supervisory Opinion. The consultation is a follow-up to the Opinion on Sustainability within Solvency II released in September 2019 which recommended that (re)insurers should consider climate risks beyond the one-year time horizon within their system of governance, risk-management system and ORSA.

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23.12.2020
New rules on legislative and non-legislative payment moratoria during COVID-19 crisis

The global COVID-19 pandemic has forced governments all over the world to impose strict measures intended to defend their healthcare systems. These measures have had a significant adverse effect on many business and economic lives of private individuals, more specifically: liquidity issues and difficulty in due payments of financial obligations. In answer to the expected liquidity shortfall, Member States implemented wide range of supportive (economic) measures, including certain forms of moratoria on payment of financial obligation, to address short-term operational and liquidity issues faced by business and private individuals. This paper looks at the latest guidelines on moratoria in face of COVID 19 and its impact on the already existing moratoria.

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30.11.2020
IAIS Insurance Capital Standard: the road travelled so far and what is next?

This article focuses on giving an overview of the Insurance Capital Standard (ICS), a capital framework which has been developed by International Association of Insurance Supervisors (“IAIS”). The ICS is being developed as a group-wide prescribed capital requirement (PCR), which is a solvency control level above which the supervisor does not intervene on capital adequacy grounds. The ICS is not intended to replace existing arrangements or capital standards for legal entity supervision in any jurisdiction.

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13.10.2020
IFRS 17 June 2020 amendments overview – the last dance?

On the 25th June 2020, the International Accounting Standard Board (IASB) has published several amendments to IFRS 17. These amendments address many of the concerns raised by the industry and aim at facilitating the implementation of IFRS17, without deviating from its underlying principles. Along with a postponed implementation deadline, the amendments aim mostly at decreasing the administrative cost and complexity as well as improving the consistency of the financial statements results. This article goes through all the changes that result from these amendments, and discusses their impact on the IFRS 17 implementation.

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02.10.2020
IORP II - Model Pension Benefit Statements: More transparent pension communication

This article discusses one of the aspects of the new IORP II directive implementation - transparent communication. It outlines requirements regarding communication between funds and their members through an annual pension benefit statement (PBS). It guides through PBS's main goals and principles, explains its importance, and presents two model PBS's.

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17.09.2020
Behavioral Scorecard with Machine Learning Components

This article discusses the benefits of applying advanced analytics in the development of behavioural scoring models. It investigates how Machine Learning techniques can be used to model the behavioural scores of consumers in each step of the development and model assessment. Some concerns regarding the usage of Machine Learning in behavioural scoring models are addressed.

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08.09.2020
Implementation and Change Management Associated with Sophisticated Tools – A glimpse at QRM

This article unveils challenges of implementing changes on complex tools that use advanced databases. Based on the example of QRM Analytical Framework, it recommends a suitable change management process. Although this high level recommendations are based on Finalyse experience with QRM, the notions therein may apply to other sophisticated tools of similar nature.

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02.08.2020
COVID-19 AND BANKING

This article analyses the effects of the COVID-19 from a bank’s credit risk point of view. First, it assesses how COVID-19 hurts the economy, the way the risk profiles of stock and potential clients deteriorate due to the pandemic’s negative effects on the economy, and it shows how this lowers credit supply. Then it elaborates on the regulations and policies – which basically target the amount of risk that banks can take on - aimed at preventing credit shortages and the results they had. Then, it explains the challenges that banks’ internal credit risk frameworks consequently face, and details valuable partners to help tackle them.

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28.07.2020
IFR/IFD - new prudential requirements for all investment firms

IFR and IFD have clearly been drafted in order to fil a gap in terms of prudential and governance regulation framework. The former situation presented some kinds of loophole between Credit Institutions that are subject to CRR / CRD IV, Investment funds that are subject to AIFM and UCITS (these regulations also provide a framework in terms of governance, risk management, remuneration, reporting and disclosure), and MIFID Investment Firms that were subject to none of them until now. The gap is now filled completely! The question I am sure all actors have in mind is how far EBA and ESMA are ready to go to consider the “implementation burden” for institutions! We might have a beginning of answer on the 4 September 2020!

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26.07.2020
Risk Appetite Framework and Decision Making

This article details the mechanisms governing risk decisions and the underlying complexity of using risk appetite as a component of the strategic decision.

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