ERM Solutions

A Common Sense, Cost Effective Approach to Risk Governance

ERM | Time for a New Approach

The current industry approach to corporate governance-ERM (enterprise risk management) is expensive, unnecessarily complex and in many instances ineffective, leaving many insurance executives dissatisfied with the results.

ERM: Time for an Honest Appraisal

Risk Culture: Foundation of Risk Governance

That’s why CTM Advisory created — SMI Risk Solutions™ — a common sense, cost effective approach to risk management designed specifically to help small to medium-sized insurers (SMIs) develop a risk governance framework that satisfies regulatory demands but also delivers value to the enterprise and its constituents.

The Untapped Benefits of ERM

Higher Ratings: Viewed favorably by the rating agencies.
Capital Management: Facilitates a more efficient use and allocation of capital.
Planning & Analysis: Improves decision-making with respect to risk taking.
Resource Management: Offers a catalyst for making difficult but necessary organizational (personnel and other) changes.
Compliance: Gives currently EXEMPT insurers a “head start” on eventual mandatory compliance.

SMI Risk Solutions™

ERM Solutions was launched in 2013 to support CTM’s Rating Advisory Services as ERM is an important component of the credit rating evaluation.

In 2015, CTM decided to broaden its service solution and began offering SMI Risk Solutions™, a new and more practical approach (see Exhibit above) to ERM that not only addresses potential regulatory and rating agency concerns but also helps insurers achieve other important organizational goals (see Untapped Benefits of ERM).

“The industry needs a fresh new approach to ERM. One that is workable and not based on some academic’s view of how risk should be managed.”

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Why CTM's Approach
to ERM is More Effective?

SETS CLEAR AND MEASURABLE OBJECTIVES
Successful strategies have clearly defined objectives that managers and other accountable parties can measure.
KEEPS IT SIMPLE; EASY TO COMMUNICATE
We believe the current industry practice of developing overly complex models and processes is an impediment to effective communication and organizational buy-in and a major reason why most ERM programs fail to meet management’s expectations.
EMPHASIZES THE USE OF RELEVANT MODELS
Many ERM consultants, unfortunately, encourage insurers to invest in overly complicated and expensive economic capital models that no one understands but the few people who built them. While we recognize insurers, in certain regulatory jurisdictions, are obligated to build such models, these models are essentially irrelevant because the amount of capital an insurer must hold is ultimately dictated by regulators, rating agencies and/or other constituents.
INTEGRATES WITH PLANNING PROCESS
The reason why ERM exists is to inform management’s decision-making throughout the planning process, as to which risks (i.e., opportunities) the organization should take. Otherwise, ERM is fated to become just another compliance program.