CERA Education.
Over the last decade, the concept of Enterprise Risk Management (ERM) has gained importance in the insurance industry and beyond. This came with the recognition of risk as being something not per se to be avoided, but to be optimally managed in the framework of a company’s risk appetite. ERM is going beyond traditional risk management in that it represents a holistic approach, and encompasses strategic risk management as well as risk culture.
Many of these developments are reflected in regulatory changes, mainly the upcoming Solvency II regime, mandatory in the European Union starting from Jan 1st, 2016. Solvency II will require an actuarial and a risk management function in all (re-)insurance undertakings. Since actuaries are ideally equipped to carry out these tasks, this is a unique opportunity for them to broaden their role and assume further responsibilities.
Against this background, in November 2009 several actuarial associations have launched the CERA credential as a global risk management designation for actuaries. CERA pursues the following goals:
- Strengthen international recognition of the actuarial profession’s ERM expertise
- Promote the development of actuaries internationally with training in ERM
- Present new opportunities for actuaries worldwide to use their expertise in an expanding range of tasks
- Send a strong message to employers and candidates that the skill set of actuaries offers significant risk management expertise
Based on the 2011-implemented education und examination system of the German Actuarial Association to study for the CERA designation, the EAA offers a series of training courses and exams (through DAV) to all actuaries who intend to deepen their knowledge in Enterprise Risk Management.
By passing the CERA training and examination course, members of the German Actuarial Association gain their CERA designation. Members of other national actuarial associations have to get in touch with their association to check the possibilities to use the EAA route.
The Seminar ‘Classification and Modelling of Risks’
The seminar focuses on quantitative analyses of financial and non-financial risks of an insurance company. After a classification of these risks, the modelling approach according to the standard formula of SII and according to an internal model is explained.
Starting from basic concepts for modelling and quantification of risks, stochastic valuation models for life and non-life companies are briefly discussed. After a deep-dive into the risk classification, strategic, reputation and operational risks are deal with. Market (equity, real estate, interest rate, currency) and credit risks are treated in detail, followed by liquidity and life / non-life underwriting risks and finally by concentration risk. The consolidated view on risks in a company and in a Group model closes the course, including a brief outline of approximation techniques.
The discussion of each risk starts with its definition, how it can be identified and distinguished from other risks, and its classification according to SII. The taxonomy is followed by qualitative and quantitative valuation approaches - including scenario analyses, stress tests, deterministic and stochastic assessments, and quantifications according to the standard formula and an internal model. Furthermore, crucial aspects of any model such as assumptions, distributions, calibration and validation are discussed, as well as limitations and criteria for the adequacy of a model for solving a given problem. Each section is closed by the use of model results in decision making and risk mitigation strategies.
The course has been designed for experienced practitioners who use model results in practice and seek guidance for management decisions. Therefore, the focus is not on technical details but on the understanding of risk models and their results, and on the derivation of management actions. Consequently, examples and case studies are a core component of the seminar.
Organised by the EAA - European Actuarial Academy GmbH in cooperation with the Hrvatsko Aktuarsko Drustvo.
