The ERM Framework

1. Corporate Governance
Establish top-down risk management

2. Line 3. Portofolio 4. Risk Transfer

Management Management Transfer out
Business strategy Think and act like a concentrated or
alignment “fund manager” inefficient risks

6. Data and Technology

5. Risk Analytics Develop
Resources Integrate data and
advanced analytical tools
system capabilities

7. Stakeholders Management
Improve risk transparency for key stakeholders

Lam’s ERM Framework (2003)

The Continous ERM Framework
Governance Who ?
Structure and
How ? (ex-
post) Policies

Dashboard Risk Assessment

Reporting and ERM and
Monitoring Qualification

Risk How ? (ex-ante)

Management
What ?

The Continuous ERM Model

 The Continous ERM Framework
Governance Structure and Policies
Governance Who ?
Risk Governance
Structure and
How ? (ex-
post) Policies How should the board provide effective risk oversight
ERM Policy
■ Board and management governance structure
■ Summaries of risk committee charters
Dashboard Risk Assessment
■ Risk management roles and responsibilities
Reporting and ERM and
Monitoring Qualification ■ Guiding risk principles
■ Summaries of risk policies and standards
■ Analytical and reporting requirements
■ Exception management and reporting processes
Risk How ? (ex-ante) Risk-Compensation Linkage
Management ■ Incorporating risk management performance into incentive
What ?
compensation
■ Establishing long-term risk-adjusted profitability measurement
The Continuous ERM Model ■ Using vesting schedules consistent with the duration of risk
exposures
■ Applying clawback provisions to account for tail risk losses.
 The Continous ERM Framework
Governance Who ?
Risk Assessment and Quantification
Structure and ■ Risk assessments
How ? (ex-
post) Policies ■ A loss-event database
■ Key risk indicators (KRIs)
■ Analytical models
■ Economic capital models

Dashboard Risk Assessment

Reporting and ERM and
Monitoring Qualification

Risk How ? (ex-ante)

Management
What ?

The Continuous ERM Model

 The Continous ERM Framework
Governance Who ?
Risk Management
Structure and ■ Risk acceptance or avoidance
How ? (ex-
post) Policies ■ Risk mitigation
■ Risk-based pricing
■ Risk transfer
■ Resource allocation

Dashboard Risk Assessment

Reporting and ERM and
Monitoring Qualification

Risk How ? (ex-ante)

Management
What ?

The Continuous ERM Model

 The Continous ERM Framework
Governance Who ?
Structure and Reporting and Monitoring
How ? (ex-
post) Policies The risk reporting and monitoring process addresses the question of
how critical risk information is reported to the board and senior
management, and how risk management performance is evaluated.

Dashboard Risk Assessment

Reporting and ERM and
Monitoring Qualification

Risk How ? (ex-ante)

Management
What ?

The Continuous ERM Model

DEVELOPING A FRAMEWORK
Change management

Communication Risk Awareness

ERM People
Tone from the top
FRAMEWORK

Incentives Skills

Integrity
 IMPLEMENTING AN ERM PROGRAM

Adapting the Continuous ERM

Framework
The goal of the Continuous ERM Model is
to capture the strengths of the
frameworks above in a single template
that is flexible enough to accommodate
the needs of organizations across From Framework to
industries.
Standards
1. Where are we?
2. What are the best-in-class practices
to strive toward?
3. What do we need to do in order to
reach our ideal state?
THANK YOU
ERM FRAMEWORK