United Kingdom

Details

  • Industry: Financial Services, Insurance, Solvency II
  • Type: Video
  • Date: 26/01/2011
  • Length: 1:54 Minutes

Michael on Pillar 2 

Transcript:

00:06

I'm Michael Crawford. I'm a Partner leading the Insurance Risk Management Practice at KPMG.

00:11

I'd like to put Pillar 2 into context. If we think about Pillar 1, which is around setting the formula for Solvency II, Pillar 3 is about how we report it, Pillar 2 is really how we're going to run our business in a Solvency II world.

00:26

So if we think about what does that look like in practice, the first element of that is actually what will our organisation look like.

00:37

The second part is basically my risk management structures, both from the risk function and operating with the business. Well, the key challenge there is deciding what risks do we want to take, which determines our capital requirements.

00:53

What we're finding in practice, around risk management, is that there's too many organisations focusing on just the risk function, and not really embedding it in the business.

01:03

We're also finding that clear lines of sight around risk appetites are not as effective as they could be, and this is still a key challenge for most organisations.

01:14

And then finally, the other challenge is: work backwards; Pillar 2 is about regulatory approval as well; the regulator has got to believe what I have put in place is effective. 

01:52

So the key thing about Pillar 2 is that Pillar 2 is about how our business runs, and how do I make this effective and efficient so that we're making the right strategic decisions.

Michael on Pillar 2