International ERM Glossary

The International ERM Glossary is intended to provide users with a set of definitions that are in common usage around the world by actuaries, regulators and members of the insurance industry. The purpose in developing the glossary is to help provide a common understanding of the terms currently in use, as definitions and meanings have varied over time, and among practitioners. It can also be used as a training and educational tool for regulators.

The glossary can be consulted per letter, organization or grouping.

DISCLAIMER: The content of the International ERM Glossary has been compiled by the Joint ORSA Subcommittee of the Insurance Regulation Committee and the Enterprise and Financial Risk Committee of the IAA. This information has been collated and presented for educational and informational purposes to the members of the IAA and interested parties. The IAA assumes no responsibility for the accuracy, completeness, currency, reliability of the information in the International ERM Glossary or access to any information contained on any of the sources cited in the Glossary. The IAA, its employees and officers shall not be liable for any loss or damage, direct or indirect, which may arise or occur as a result of the use of or reliance upon any of the material in the International ERM Glossary.

TermGroupingOrganization or Jurisdiction Defining TermSource of DefinitionDefinition
Scenario AnalysisMethodsIAISIAIS Supervisory MaterialA complicated type of test, which contains simultaneous moves in a number of risk factors and is often linked to explicit changes in the view of the world. S
Scenario AnalysisMethodsThe European Economic AreaCEA Solvency IISimulation of an alternative set of parameters within a model in order to establish the impact on the outcome. S
Scenario AnalysisMethodsThe European Economic AreaSolvency IIThe term is mentioned in the Guidelines on the ORSA, but has not been defined explicitly.S
Scenario AnalysisMethodsUnited StatesNAIC ORSA MANUALAnalysis of the impact of possible future outcomes, based on alternative projected assumptions. This can include changes to a single assumption or combination of assumptions.S
Scenario AnalysisMethodsUnited StatesU.S. ASB Terms(Scenario Test) A process for assessing the impact of one possible event or seveal simultaneously or sequentially occuring possible events on an organization's financial position.S
SolvencySolvency termsIAISIAIS Supervisory MaterialAbility of an insurer to meet its obligations to policyholders when they fall due. Solvency includes capital adequacy but also involves other aspects of a solvency regime, for example, technical provisions, qualitative aspects (such as would be addressed in an enterprise risk management framework), supervisory review and supervisory reporting.S
SolvencySolvency termsInternational Actuarial AssociationIAA Deriving Value from ORSAThe adequacy of available economic or regulatory capital to meet future obligations or regulatory requirements.S
SolvencySolvency termsUnited StatesNAIC ORSA MANUALFor a given accounting basis, the state where, and extent to which, assets exceed liabilities.S
Solvency Capital RequirementSolvency termsThe European Economic AreaCEA Solvency IIThe amount of capital to be held by an insurer to meet the Pillar I requirements under the Solvency II regime.S
Solvency Capital RequirementSolvency termsThe European Economic AreaSolvency IIThe supervisory regime should provide for a risk-sensitive requirement, which is based on a prospective calculation to ensure accurate and timely intervention by supervisory authorities. (Solvency II Directive (60)S
Stochastic AnalysisMethodsIAISIAIS Supervisory MaterialA methodology which aims at attributing a probability distribution to financial variables of interest. It sometimes uses closed form solutions, often involves simulating large numbers of scenarios in order to reflect the distributions of the capital required by, and the different risk exposures of, the insurer. S
Stochastic AnalysisMethodsUnited StatesNAIC ORSA MANUALA methodology designed to attribute a probability distribution to a range of possible assumptions. This can include changes to a single assumption or combination of assumptions.S
Strategic RiskRisk CategoriesChinaCIRC C-ROSS Conceptual FrameworkThe risk arising from incompatibility between strategy and the market environment or the company's capacity, due to ineffective strategy formulation and execution processes or the changing business environment.S
Strategic RiskRisk CategoriesInternational Actuarial AssociationIAA - Acturial Aspects of ERM for Insurance CompaniesThe risk in relation to the achievement of an organisation's strategic business plan and objectives.S
Strategic RiskRisk CategoriesInternational Risk Management InstituteIRMI TermsExposure to uncertainty arising from long-term policy decisions.S
Strategic RiskRisk CategoriesThe European Economic AreaCEA Solvency IIType of business risk. The risk of a change in value due to the inability to implement appropriate business plans and strategies, make decisions, allocate resources, or adapt to changes in the business environment.S
Stress TestMethodsIAISIAIS ICP 16The method of measuring the financial impact of stressing one or relatively few factors affecting the insurer.S
Stress TestMethodsIAISIAIS Supervisory MaterialThe method of solvency assessment that provides for the consideration of the impact (current and prospective) of a particular defined set of alternative assumptions or outcomes that are adverse. Consideration is given to the effect on the insurance company assets, liabilities and operations of a defined adverse scenario.S
Stress TestMethodsInternational Actuarial AssociationIAA ISAPA process for assessing the impact of one possible event or several simultaneously or sequentially occurring possible events on an entity's financial position (draft).S
Stress TestMethodsThe European Economic AreaCEA Solvency IIA type of scenario analysis in which the change in parameters are considered significant, or even extreme.S
Stress TestMethodsThe European Economic AreaSolvency IIThe term is mentioned in the Guidelines on the ORSA, but has not been defined explicitly.S
Stress TestMethodsUnited StatesNAIC ORSA MANUALA type of scenario analysis in which the change in parameters is considered significantly adverse or even extreme.S
Stress TestMethodsUnited StatesU.S. ASB TermsA process for measuring the impact of adverse changes in one or relatively few factors affecting an organization's financial position.S