ERM Implementation –
Real-Life Stories
David Murray, FCAS
Casualty Actuarial Society Spring Meeting
June 19, 2007
ERM Implementation –
Real Life Stories
David Murray, FCAS
Why ERM?
Insurance is a win small/ lose big proposition
• Profits made incrementally over time, but can be wiped out in an afternoon
Companies that can best manage the downside will succeed in the long run
Enterprise Risk Management involves planning for what can happen, not just what you expect,
or hope, to happen
• Allows for front-end risk mitigation
• Generates forward-looking, pro-active culture
• Allows development of options for changes in future conditions
• Uncovers opportunities
ERM Implementation –
Real Life Stories
David Murray, FCAS
ERM at CNA
Risk management is the insurance business
At CNA, “enterprise” view has accelerated over last five years
CNA’s approach has been to move from a complicated, “siloed” multiline company, to a
focused P&C company
• Centralized with controls and disciplines around core functions
• Exited lines of business
• Changed product mix to balance risk in the insurance portfolio
• Identified key risks and set-up processes to manage them
• Upgraded data quality and management information
• Introduced risk measures into decision analysis
ERM Implementation –
Real Life Stories
David Murray, FCAS
Fundamentals of Enterprise Risk Management
- How much risk can you take?
- How much risk do you have?
- How do you manage it?
- How much do you get paid to assume it?
ERM Implementation –
Real Life Stories
David Murray, FCAS
Critical Pieces of ERM Process
- Executive management support
- Risk identification / ability to be self-critical
- Consistent risk measure across business and risk types
- Clear accountabilities
- Aligned incentives
ERM Implementation –
Real Life Stories
David Murray, FCAS
Building a Culture of Risk Management
What Can Go Wrong? What Is The Impact? What Can I Do?
What Is The Opportunity? What Is The Return? Is It Appropriate?
Thinking of Plan B at Same Time as Plan A
•Defining When to Use Plan B
Disciplined Decision-making, Clear Lines of Authority
Not Just Big Decisions
•What is Weak Link of Analysis – What Are Consequences
ERM Implementation –
Real-Life Stories
David Murray, FCAS
Casualty Actuarial Society Spring Meeting
June 19, 2007
ERM Implementation –
Real Life Stories
David Murray, FCAS
Disclaimer
The purpose of this presentation is to provide general information about CNA and its current
Enterprise Risk Management strategies. Given the unique nature of CNA strategies, they may or
may not be appropriate for use by other organizations and may be subject to change without
notice.
CNA is a service mark registered with the United States Patent and Trademark Office. Copyright
© 2007 CNA. All rights reserved.