Progress continues to be made by the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) toward the next exposure draft of an accounting standard for insurance contracts. In addition, the boards are moving closer to further changes to the accounting for the assets backing insurance contracts. However, convergence between the FASB and IASB appears to be limited, both for the insurance contract project and more generally.

This white paper provides an update on recent activity on these topics.

A case study published in Contingencies looks at how Ahold USA Inc. has benefited from predictive modeling for medical claims management. Read the full case study here.

Over the last several years we’ve published several examples of how technology has led to breakthroughs in actuarial analysis, including articles on high-performance and cloud computing. Now a new article looks at how advances in the approach to and affordability of predictive analytics are allowing insurers to take a more innovative approach to how they manage their claims. As Ravi Kumar points out in “A cost-effective approach to casualty claims analytics,” more sophisticated claims analytics can have significant benefits for a property and casualty insurer and are now available to smaller companies.

Last week’s onsite survey at the 2012 Enterprise Risk Management Symposium gathered perspectives from 105 risk managerers and other participants. Here are the final results.

And here are the results of our open-ended question, “What are the biggest misconceptions about enterprise risk management?”

We asked attendees of the 2012 Enterprise Risk Management Symposium in Washington, D.C., an open-ended question: What do you think is the biggest misconception about enterprise risk management? Here is what they had to say:

We’re glad you asked. Alongside several questions about the maturity of enterprise risk management (ERM) models, we’ve  been asking attendees at the 2012 ERM Symposium in Washington DC how they would characterize the risk management breakdown that led to the Titanic sinking just over 100 years ago. Here’s what they had to say.

The results from our first 50 enterprise risk management iPad surveys are streaming live at the Milliman ERM Symposium booth. One of the more intriguing early findings: Two barriers have jumped out as major impediments to ERM success. Risk professionals are asking: How do we measure value? And how do we navigate the complexity of an ERM program?

Anyone interested in participating in the survey or in seeing the full results should visit the Milliman booth.

A critical aspect of successfully managing risk is to understand the economic capital requirements necessary to sustain and grow one’s business. For the financial services industry, economic capital modeling (ECM) is required regulation for banking. The figure below, based on the preliminary results from our Milliman Risk Institute survey, shows that more than 55% of respondents in the financial services industry have ECM in their organizations; for general corporates it can still be a beneficial tool, but only about 25% of our respondents have or will have ECM in their organizations.

Read more…

Enterprise risk management (ERM) programs are faced with numerous internal challenges. The figure below pulls from the preliminary results of the inaugural Milliman Risk Institute survey and shows that respondents to our survey believe that the biggest constraints to successful ERM programs are:

• Explaining the value proposition to the business
• Optimizing this process or these findings in our business
• Managing ERM risk data to positive results

It can be challenging, based on competing business priorities, to optimize the ERM process in any organization. Traditional ERM programs have been compliance-driven, so there has not been a focus to optimize business value in the process. More and more we are seeing that organizations want a return on their ERM investments so they can provide higher quality inputs to operating and strategic planning.

What are the biggest constraints you face in building your ERM program? We welcome your comments below. And we invite you to visit us in our booth at the ERM Symposium to see more of our preliminary survey results–you may win an iPad for your efforts.

Our booth is up and running at the 2012 ERM Symposium in Washington, DC. Come by and visit us. If you participate in our iPad survey, or offer us a video sound bite, we’ll enter you in a drawing for a New iPad. Where’s the risk in that?