Solvency II: Optimizing your Required Funding
Solvency II requires sufficient funding of all liabilities, based upon the professional and embedded risk management handling of all material risks for the entire insurance or reinsurance organization.
The directive has two main goals:
- Transparent, standardized external reporting and accountability, and by doing so creating a level insurance environment
- Demonstrate that insurers can meet their financial obligations with sufficient funding, given all their risks
A process-based risk approach is the best foundation for risk management of market, credit, liquidity, insurance and all operational risks. Developing such a program is a time consuming and complex project, due to the involvement of the entire business that should result in the embedding of an overall risk-control framework. To be prepared, it is imperative that insurance companies begin developing qualitative and quantitative process-based risk management approaches and integrate them with their quantitative systems.
Risk management framework
Pillar 2 of Solvency II prescribes the embedding of daily risk management of all material risks in an organization, based on sound governance. In addition, Pillar 2 also includes the procedures and structure of how the board will be held accountable by the regulator; the six step regular and non-regular ORSA. Each organization has its own unique business processes, procedures and organizational structure and its own unique risks and related controls. As a result, insurers must build their own risk management framework. Realizing such a system demands a change in work processes, procedures and a risk-based awareness of the business, especially regarding the processes of each department in the organization.
Get in control of your organization with Bwise. Understand your processes, monitor your losses & incidents and manage your material risks.
Identify risks, realize transparency, and get in control
Based on best practices, BWise has developed an approach for the daily operationalizing and embedding of the required risk management system. It also supports the six steps of the two 
ORSA methods, an integral part of Solvency II. BWise has developed capabilities within the BWise software solution to assist organizations and more actively involve managers and employees. The system assists employees to identify risks, realize transparency, monitor risks and embed overall risk management into the organization. As a result, insurers will have a better grip on their operation and reduce their risks, resulting in decrease losses and more importantly reduce funding.
Benefits
Using the integrated BWise solution, insurers are also enabled to identify potential business process improvements and create in-depth reports for management. Ultimately, insurance companies can use the BWise integrated GRC platform not only for the operational risk management of Pillar 2, but also for required compliance and audit functions. BWise, founded in 1994, has many years of experience in implementing internal control and risk management systems for insurance companies.
BWise, founded in 1994, has many years of experience in implementing internal control and risk management systems for insurance companies.
