As a Compliance official, how would you ensure Own Risk and Solvency Assessment (ORSA) requirements by Companies as a part of Enterprise Risk Management?

'Risk, in insurance terms, is the possibility of a loss or other adverse event that has the potential to interfere with an organization's ability to fulfill its mandate, and for which an insurance claim may be submitted'. On the other hand, risk management ensures that an organization identifies and understands the risks to which it is exposed. Risk management also guarantees that the organization creates and implements an effective plan to prevent losses or reduce the impact of loss. A risk management plan includes strategies and techniques for recognizing and confronting these threats. Good risk management doesn't have to be expensive or time consuming; it may be as uncomplicated as answering these three questions: What can go wrong? What will we do, both to prevent the harm from occurring and in response to the harm or loss? If something happens, how we will pay for it? An effective risk management practice does not eliminate risks. However, having an effective and operational risk management practice shows an insurer that your organization is committed to loss reduction or prevention. It makes your organization a better risk to insure. The essence of risk management policy of any corporate is to be innovative and still make a profit. The Enterprise Risk management policy essentially aims at solvency protection of a company. The supervisor or IRDAI in India establishes enterprise risk management requirements for solvency purposes that require insurers to address all relevant and material risks. The supervisor establishes enterprise risk management requirements for solvency purposes that require insurers to address all relevant and material risks. The supervisor requires the insurer's enterprise risk management framework to provide for the identification and quantification of risk under a sufficiently wide range of outcomes using techniques which are appropriate to the nature, scale and complexity of the risks the insurer bears and adequate for risk and capital management and for solvency purposes. As a Compliance Officer, it would be right on every Company Secretary to ensure the following: Documentation of enterprise risk management framework. The supervisor requires the insurer's measurement of risk to be supported by accurate documentation providing detailed descriptions and explanations of the risks covered, the measurement approaches used and the key assumptions made. Risk Management policy covered under the enterprise risk management. The supervisor requires the insurer to have a risk management policy which outlines how all relevant and material categories of risk are managed, both in the insurer's business strategy and its day-to-day operations. The supervisor requires the insurer to have a risk management policy which describes the relationship between the insurer's tolerance limits, regulatory capital requirements, economic capital and the processes and methods for monitoring risk. As per Regulatory compliance, every company should have the following policies in place namely: ALM Policy The supervisor requires the insurer to have a risk management policy which includes an explicit asset-liability management (ALM) policy which clearly specifies the nature, role and extent of ALM activities and their relationship with product development, pricing functions and investment management. Investment Policy The supervisor requires the insurer to have a risk management policy which is reflected in an explicit investment policy which specifies the nature, role and extent of the insurer's investment activities and how the insurer complies with the regulatory investment requirements established by the supervisor, and establishes explicit risk management procedures within its investment policy with regard to more complex and less transparent classes of asset and investment in markets or instruments that are subject to less governance or regulation. ORSA Policy The supervisor requires the insurer to perform its own risk and solvency assessment (ORSA) regularly to assess the adequacy of its risk management to ascertain this current, and future solvency position. The supervisor requires the insurer's Board and Senior Management to be responsible for the ORSA. According to the ORSA manual, there are a minimum of five key principles that a robust ERM framework should encompass. Risk Culture and Governance Roles and responsibilities need to be well defined and within the organization a culture should be nurtured that supports accountability in risk making decisions. Risk Identification and Prioritization Clear management of the risk identification process is essential and responsibility for this process must be clear. You need to ensure these procedures are operating effectively throughout your organization. Putting the right risk assessment process in place through the use of ERM software can help tremendously. Risk Appetite, Tolerance and Limits To ensure that the risk strategy of the Board of Directors is made clear, a formal Risk Appetite Statement needs to be written and detailing associated risk tolerance and limits. Risk Management and Controls Throughout your organization ERM should operate to ensure risk is kept within the boundaries defined by the Risk Appetite Statement. Risk Reporting and Communication To ensure transparency of the risk management processes your key personnel require strong reporting and communication procedures. However, your organization should ensure that this does not impede active, informal management decisions on risk-taking.