Actualizing and Transitioning Enterprise Risk Management Vinaya Sharma and Randy Tillis Allstate Financial .


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Implementing and Transitioning Enterprise Risk Management Vinaya Sharma and Randy Tillis Allstate Financial ERM Symposium – Chicago CS 6-A April 26/27, 2004 Vision To be the company financial service professionals choose for their clients' financial protection, savings and retirement needs
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Executing and Transitioning Enterprise Risk Management Vinaya Sharma and Randy Tillis Allstate Financial ERM Symposium – Chicago CS 6-An April 26/27, 2004 CONFIDENTIAL - DO NOT DISTRIBUTE

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Vision To be the organization monetary administration experts decide for their customers\' money related assurance, reserve funds and retirement needs Mission To help budgetary administration experts in meeting their customers\' money related security, reserve funds, and retirement needs by giving top-level items conveyed with dependable and proficient administration About Allstate Financial CONFIDENTIAL - DO NOT DISTRIBUTE

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Strategies Broadly disperse an engaged arrangement of top-level products through a multi-channel system of monetary service professionals Drive operational scale, productivity and adequacy in all that we do Leverage venture and hazard administration expertise to convey development and unrivaled hazard balanced returns. Profit by the quality of the Allstate mark Operate as a superior association About Allstate Financial CONFIDENTIAL - DO NOT DISTRIBUTE

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Life Insurance Term Whole Life Universal Life Deferred Annuities Fixed Variable Equity-Indexed Market Value Adjusted T-Link Payout Annuities Immediate Structured Settlements Health Disability Long Term Care Accident Banking administrations Institutional Markets CONFIDENTIAL - DO NOT DISTRIBUTE

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Risk Analysis Current : Risks are tended to/claimed, yet divided Desired : Enterprise perspective of dangers (e.g. value, default, financing cost, calamity recuperation, and so on) Current : Each item saw autonomously Desired : Capture counterbalances from different lines of business Current : Infrequent chose estimations of hazard Desired : Routine estimation of hazard levels Current : Limits to chance, assuming any, are at smaller scale level Desired : Enterprise level limits to hazard resistances CONFIDENTIAL - DO NOT DISTRIBUTE

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Why Enterprise Risk Management Provide all inclusive extension/appraisal to hazard investigation which right now doesn\'t exist Present how a solitary important monetary occasion influences the organization Reveal regular supports and portfolio impacts Enhance capital designation prepare Clarify parts/obligations Best Practice in today\'s surroundings CONFIDENTIAL - DO NOT DISTRIBUTE

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Enterprise Risk Mgmt Approach Analysis of huge dangers (e.g. value, default, loan fees, and so on) Risk Dashboard (See Appendix 1) Quarterly Risk Profile Report Aggregate dangers all through Enterprise Catalog of dangers Monthly upgrades Risk Forum "Point" group on extensive occasions that effect the endeavor CONFIDENTIAL - DO NOT DISTRIBUTE

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Enterprise Risk Mgmt – Significant Risk Analysis Aggregate data Equity: VA, EIA, Unaffliated basic stock, and so on Default: Private Placements, Inv Grade Corp Bonds, Real Estate, and so forth. Build up Metrics Not subject to control Must be utilized/reasonable to the expert Samples: Income, Capital, Cash Flow CONFIDENTIAL - DO NOT DISTRIBUTE

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Enterprise Risk Mgmt – Significant Risk Analysis Establish Tolerance Considerations Insurance Departments Investors Rating Agencies Establish situations Stochastic versus Deterministic Goal of situations Determine how frequently hazard profile to be measured CONFIDENTIAL - DO NOT DISTRIBUTE

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Enterprise Risk Mgmt – Aggregate Risks Catalog of dangers inside Areas of Responsibility (See Appendix 2) Monthly upgrades from ERM contacts Risk Forum Day long occasion 15 minutes of popularity Goals Share data Quantify dangers/openings Clarify parts (See Appendix 3) CONFIDENTIAL - DO NOT DISTRIBUTE

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Enterprise Risk Mgmt – Point Team Terrorist Attacks NIMBDA Virus Bush 2003 Tax Proposals CONFIDENTIAL - DO NOT DISTRIBUTE

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Enterprise Risk Mgmt Successes Conduit of data Aggregation of presentation Increased train Broader comprehension/estimation of hazard CONFIDENTIAL - DO NOT DISTRIBUTE

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Enterprise Risk Mgmt Lessons Turf issues on Significant Risks Witch chases on amassing dangers Risk Mgmt is distinctive to various individuals Can not fulfill the majority of the general population the greater part of the time Senior Management purchase in is crucial Quantifying ERM esteem can be troublesome CONFIDENTIAL - DO NOT DISTRIBUTE

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Transitioning Enterprise Risk Management Creating Value Handling Change CONFIDENTIAL - DO NOT DISTRIBUTE

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Creating Value from ERM - A novices viewpoint A Three prong way to deal with ERM Dashboards Aggregate Risks Reactive Risk Management CONFIDENTIAL - DO NOT DISTRIBUTE

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Creating Value from ERM Dashboard Variable Annuity changes in 2003/04 that effect the dashboard incorporate Market Recovery SOP 03-01 (GAAP GMDB/IB saving) RBC Phase II (Statutory capital) New Product advancements (GMWB,GMAB) CONFIDENTIAL - DO NOT DISTRIBUTE

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Creating Value from ERM – Aggregate and Catalog Risk recognizable proof Culture move Witch chases CONFIDENTIAL - DO NOT DISTRIBUTE

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Creating Value from ERM – Reactive Risk Management Examples Business Recovery Investment Advisors Parmalat 2003 Flu Deaths CONFIDENTIAL - DO NOT DISTRIBUTE

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Transitioning Enterprise Risk Management Handling Change CONFIDENTIAL - DO NOT DISTRIBUTE

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Early Learnings included Research Practicality Communication Timeliness CONFIDENTIAL - DO NOT DISTRIBUTE

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Changes in the Industry by COSO Basel II International Accounting Standards Involvement with CAS PRMIA SOA CONFIDENTIAL - DO NOT DISTRIBUTE

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Integrating ERM with a parent/backup includes Communication Clearly characterized parts/obligations Demonstrating Value included by ERM CONFIDENTIAL - DO NOT DISTRIBUTE

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Implementing and Transitioning Enterprise Risk Management Vinaya Sharma and Randy Tillis Allstate Financial ERM Symposium - Chicago April 2004 Appendices CONFIDENTIAL - DO NOT DISTRIBUTE

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CONFIDENTIAL - DO NOT DISTRIBUTE

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Catalog of Risks CONFIDENTIAL - DO NOT DISTRIBUTE

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Responsibility Template CONFIDENTIAL - DO NOT DISTRIBUTE

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