Risk Management
Task Force

Enterprise Risk Management (ERM) Minutes


Enterprise Risk Management (ERM) Subgroup
COSO ERM Framework Call (CRO)

October 8, 2003
2 :00 p.m. Central Time

Juan Kelly (Leader), Randy Edwards, Dave Ingram, Barry Franklin, Toni Maloney, Claus Metzner,
Sudha Shenoy, John Stark, Ted Steven, Randy Tillis, Julie Young (SOA)

  • We should take the higher road.  We should not get caught up in the minutiae. 

  • Preemption issue:  we can’t be intimidated, but on the other hand there is a middle ground somewhere. 

  • If actuary appeared once that was about it in the PWC paper. 

  • There are many actuaries who are functioning as CRO’s in their companies. 

  • In the PWC paper we should deal not only with the insurance company issue but that industrial
    firms have a significant risk.  Procedurally, we can’t be all things to all people in terms of managing risk so we have to choose our battles. 

  • The actuary’s role is not necessarily to be the champion.  We are the people who are responsible
    for quantifying the risks. 

  • Are you saying that the PWC paper doesn’t focus on this at all?  Yes.

  • We have to address both form and substance.  

  • We should focus on the substance.  How do we most efficiently do that?  Separate between insurance companies and non-insurance companies.  The actuarial/underwriting control cycle
    would be a good place to start.  Balance sheet, risk adjusted return on capital, internal controls
    that should be in place.

  • John Stark, Jim Reiskytl and Valentina Isakina just drafted a seven-page letter to send to COSO.  The president of the academy will sign the letter.  It will be sent out to the presidents of the
    different organizations for their feedback.  Our response is trying to take the higher ground. As
    soon as the presidents have signed off and the SOA and Academy look at it one more time the response will be sent out.  The deadline is October 15.

  • This group’s purpose is to advocate for actuaries to be considered first and foremost for CRO.

  • We have an opportunity to move faster, to have a more focused message.  We feel that the best person to quantify is an actuary.  We want more CRO’s and we want more CRO’s to have to be actuaries.  It’s the perfect environment to be calling for that because there is still a lot of dirty
    laundry that companies can’t seem to shake out.

  • What happened to ethics?  What happened to playing by the rules of your own company? 

  • The Academy is dealing with COSO.  John Stark is on that and will be the effective liaison.  And
    now we can move on with our primary purpose.

  • Where do we start?  We were hamstrung a little bit by the strategic plans of the SOA that this
    group be involved by the dialog.  We’ve done a lot of the work.  Maybe we can put together
    one page of “here is what we want to do” and get people to sign off on it.

  • If we submit a paper it should be submitted in early December.  It could be a “mini” paper but
    it would entail a strong public relations campaign to be behind it.  There would have to be spokespeople from the CRO team, we’d have to do some media training, and then we would
    have to have some PR people from the SOA. 

  • We’d have to have a final draft of the paper by a month from now.  You have to get the ear of someone at the top.  If they say yes, then bring in the PR people of the Society.  Then come up
    with the substance and get on Larry King.  Whoever writes the paper and goes on Larry King
    needs to have checklists that show measurement. 

ACTION ITEM: Julie will get in touch with Valentina regarding a call with Ted, Randy, Claus, Toni, John, Juan and Valentina.

Valentina, What do we need to do to get the authority to proceed here? We want to get the CRO message to the public via Larry King. The message is: We want more CRO’s and we want more CRO’s to have to be actuaries.

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