Foundation ERM Session 2: ERM frameworks

This presentation is based on a part of an academic course on Enterprise Risk Management (ERM) titled ‘ERM frameworks’ and covers topics such as: The 2007-09 Credit Crisis, similarities and differences between banks and insurers, Basel II and Basel III (banks), Solvency II (European insurers) and policy responses to the 2007-09 Credit Crisis

1Session 3: ERM frameworks
2Session 3: ERM frameworks
3The 2007-09 Credit Crisis
4Stages 1 and 2
5Stage 3: Counterparty mistrust
6Stage 4: Hubris always leads to nemesis?
7An overview
8Session 3: ERM frameworks
9Typical bank and insurer business models differ
10Different funding bases (excluding equity)
11Different accounting bases
12Session 3: ERM frameworks
13Basel II
14Basel II - Market risk
15Basel II - Market risk (ctd)
16Basel II - Credit risk
17Basel II - Credit risk - aims
18Basel II - Operational risk
19Basel II - Loopholes (1)
20Basel II - Loopholes (2) - A bank view (Dresdner)
21Countries that came out of 2007-09 Crisis better
22Revisions to Basel II post crisis: overview
23Basel III capital requirements
24Revisions to Basel II post crisis: market risk
27Session 3: ERM frameworks
28Solvency II
29Trends in insurance regulation
30Current UK financial regulatory structure
31UK FSA, PRA, FCA Principles (see Handbook)
32PRA’s Risk Framework
33Solvency II framework for European insurers
34Solvency II - Three pillars
35Solvency I
36Origins of Solvency II
37Solvency II - Summary drivers
38Example of uneven capital treatment across sectors
39Solvency II - Pillar 1 capital requirements
40Solvency II - SCR and MCR
41Session 3: ERM frameworks
42Appendix: Policy responses to 2007-09 Credit Crisis
43Turner review
44(1) Key drivers of Crisis
45(2) UK-specific factors
46(3) Recommendations
47(4) Capital , accounting and liquidity
48(5) Narrow banks versus Investment banks
49(6) EU-level regulatory body
50(7) Some open questions
51Carry through to insurers?
52Differing economic roles of banks and insurers
53Two main roles of money
54Blurred boundaries
55Ideas proposed for regulatory change
56(1) Capital adequacy
57(2) Ring-fence activities linked to depositor protection
58(3) Existing investors to contribute more to bailouts
59Resolution of failing firms
60(4) Improve business behaviours
61Implications for others, e.g. insurers and pension funds
62Important Information

Contents | Next | ERM Lecture Series

Desktop view | Switch to Mobile