| Available Capital | Solvency terms | China | CIRC C-ROSS Conceptual Framework | The economic resources that can absorb losses in insurance undertakings on a going-concern basis or upon liquidation. Available capital is equal to admitted assets minus admitted liabilities of insurance undertakings. | A |
| Available Capital | Solvency terms | IAIS | IAIS Supervisory Material | (Capital) The financial resources of an insurer and different variation/calculations of capital may be referred to as equity capital (i.e. paid-up, share, subscribed), economic capital and regulatory capital. | A |
| Available Capital | Solvency terms | The European Economic Area | CEA Solvency II | Internally defined capital measure based on the companies' valuation of the market-consistent value of assets minus the market-consistent value of obligations. | A |
| Available Capital | Solvency terms | The European Economic Area | Solvency II | Not specifically defined. The term eligible own funds is used as term for the amount of own funds to cover the Solvency Capital Requirement. | A |
| Available Capital | Solvency terms | United States | NAIC ORSA MANUAL | The amount of resources that an enterprise has at a given point in time under a defined valuation or accounting basis (e.g., economic, statutory, GAAP, or a combination) to support its business and under the defined valuation represents the insurers assessment of the types of capital required to support its business. | A |
| Available Solvency Margin | Solvency terms | The European Economic Area | CEA Solvency II | The difference between the value under regulatory measurement of the eligible capital held by an insurer, and the sum of the values under regulatory measurement of the obligations. | A |
| Available Solvency Margin | Solvency terms | The European Economic Area | Solvency II | Not specifically defined. In Solvency II this is noted as excess own funds and be would be equal to the difference between the eligible own funds and the Solvency Capital Requirement. | A |
| Conditional Tail Expectation or Tail VaR (Tail Value at Risk) | Methods | IAIS | IAIS Supervisory Material | Value at Risk (VaR) plus the average excess over the VaR if such excess occurs over a specified amount of time. | C |
| Conditional Tail Expectation or Tail VaR (Tail Value at Risk) | Methods | International Actuarial Association | IAA - Acturial Aspects of ERM for Insurance Companies | Conditional Tail Expectation or "CTE" or Tail Value at Risk ("TVaR") is the mean of the distribution above a certain percentile or confidence level (a) or in other words, the expected value of a loss given that the loss is above a specified threshold, which is defined according to a specified percentile value a. This risk measure has many other names including Tail Value at Risk, Tail Conditional Expectation and Expected Shortfall. | C |
| Conditional Tail Expectation or Tail VaR (Tail Value at Risk) | Methods | International Risk Management Institute | IRMI Terms | An economic cost of ruin (ECOR)-like measure in the sense that both the probability and the cost of "tail events" are considered; the calculation differs from ECOR in such a way that it has a desirable statistical property (i.e., coherence). | C |
| Conditional Tail Expectation or Tail VaR (Tail Value at Risk) | Methods | The European Economic Area | CEA Solvency II | A coherent risk measure. For a given confidence level 1-a it measures the average losses over the defined threshold (typically set as the VaR for a given quantile), i.e. the conditioned mean value, given that the loss exceeds the 1-a percentile. | C |
| Conditional Tail Expectation or Tail VaR (Tail Value at Risk) | Methods | United States | NAIC ORSA MANUAL | A measure of the amount of risk that exists in the tail of a distribution of outcomes, expressed as the probability weighted average of the outcomes beyond a chosen point in the distribution. | C |
| Correlation Matrix | Methods | The European Economic Area | Solvency II | Not specifically defined. The correlation coefficients for the aggregation of the risk modules, as well as the calibration of the capital requirements for each risk module, shall result in an overall Solvency Capital Requirement.(Solvency II Directive art. 104.3) | C |
| Correlation Matrix | Methods | United States | NAIC ORSA MANUAL | A symmetric matrix specifying pairwise interactions between a set of variables or data. A correlation matrix is commonly applied to risks or capital amounts and is an important determinant of calculated risk capital, including levels of diversification. | C |
| Credit Risk (Counterparty Risk) | Risk Categories | Canada | OSFI Manual of Reporting | The risk that a borrower may default on his credit obligations to the lender. | C |
| Credit Risk (Counterparty Risk) | Risk Categories | China | CIRC C-ROSS Conceptual Framework | The risk of losses arising from counterparties failing to fulfill contractual obligations, or to fulfill the contractual obligations on time, or from adverse changes in credit conditions. | C |
| Credit Risk (Counterparty Risk) | Risk Categories | IAIS | IAIS Supervisory Material | The risk of financial loss resulting from default or movements in the credit rating assignment of issuers of securities (in the insurers investment portfolio), debtors (e.g. mortgagors), or counterparties (e.g. on reinsurance contracts, derivative contracts or deposits) and intermediaries, to whom the company has an exposure. Credit risk includes default risk, downgrade or migration risk, indirect credit or spread risk, concentration risk and correlation risk. Sources of credit risk include investment counterparties, policyholders (through outstanding premiums),reinsurers, intermediaries and derivative counterparties. | C |
| Credit Risk (Counterparty Risk) | Risk Categories | International Actuarial Association | IAA - Acturial Aspects of ERM for Insurance Companies | The risk that a counterparty will be unable or unwilling to make payments due under a specific agreement | C |
| Credit Risk (Counterparty Risk) | Risk Categories | International Risk Management Institute | IRMI Terms | The possibility that either one of the parties to a contract will not be able to satisfy its financial obligation under that contract. | C |
| Credit Risk (Counterparty Risk) | Risk Categories | The European Economic Area | CEA Solvency II | The risk of a change in value due to actual credit losses deviating from expected credit losses due to the failure to meet contractual debt obligations. | C |
| Credit Risk (Counterparty Risk) | Risk Categories | The European Economic Area | PRA Rulebook | The risk of loss, or of adverse change, in the financial situation, resulting from fluctuations in the credit standing of issuers of securities, counterparties and any debtors to risk, or market risk concentrations | C |
| Credit Risk (Counterparty Risk) | Risk Categories | The European Economic Area | Solvency II | The risk of loss or of adverse change in the financial situation, resulting from fluctuations in the credit standing of issuers of securities, counterparties and any debtors to which insurance and reinsurance undertakings are exposed, in the form of counterparty default risk, or spread risk, or market risk concentrations. (Solvency II Directive art. 13(32)) | C |
| Credit Risk (Counterparty Risk) | Risk Categories | United States | U.S. ASB Terms | Risk associated with the possibility of a loss on an investment arising from a borrower who does not make payments as promised. | C |
| Currency Risk | Risk Categories | International Actuarial Association | IAA - Acturial Aspects of ERM for Insurance Companies | The risk of loss arising from movement in foreign exchange rates | C |
| Deficit Capital | Solvency terms | The European Economic Area | Solvency II | Solvency deficit (term is mentioned in Solvency II Directive art. 221) | D |
| Deficit Capital | Solvency terms | United States | NAIC ORSA MANUAL | If the amount of available capital is less than the determined risk capital of an enterprise, then the enterprise is said to have deficit capital. | D |
| Defined Security Margin | Solvency terms | United States | NAIC ORSA MANUAL | Minimum threshold of available capital that a company wishes to achieve or maintain, consistent with the company's business strategy, risk appetite and risk tolerance. | D |
| Dependency Structure | Methods | United States | NAIC ORSA MANUAL | Specification of the relationship between different variables. Commonly specified in a correlation matrix. | D |
| Diversification | Methods | International Risk Management Institute | IRMI Terms | A risk control technique that spreads loss exposures over a myriad of projects, products, areas, or markets. | D |
| Diversification | Methods | The European Economic Area | Solvency II | 'Diversification effects' means the reduction in the risk exposure of insurance and reinsurance undertakings and groups related to the diversification of their business, resulting from the fact that the adverse outcome from one risk can be offset by a more favourable outcome from another risk, where those risks are not fully correlated. (Solvency II Directive art. 13(37) | D |
| Double Gearing | Solvency terms | IAIS | IAIS Supervisory Material | Used to describe a situation where the same capital is used simultaneously as a buffer against risk in two or more legal entities of a conglomerate. | D |
| Double Gearing | Solvency terms | The European Economic Area | CEA Solvency II | Situation in which one entity holds capital for regulatory purposes, which is issued by another entity within the same group and the issuer is also using the same capital for regulatory purposes. In that situation, externally generated capital of the group is 'geared up' twice; first by the parent, and then a second time by the dependent. | D |
| Double Gearing | Solvency terms | The European Economic Area | Solvency II | The double use of own funds eligible for the Solvency Capital Requirement among the different insurance or reinsurance undertakings taken into account in that calculation shall not be allowed. (Solvency II Directive art. 222) | D |
| Double Gearing | Solvency terms | United States | NAIC ORSA MANUAL | Used to describe situations where multiple companies (typically parent and subsidiary) are using shared capital to buffer against risk occurring in separate entities. | D |
| Economic Capital | Solvency terms | IAIS | IAIS Supervisory Material | The capital needed by the insurer to satisfy its risk tolerance and support its business plans and which is determined from an economic assessment of the insurer's risks, the relationship of these risks and the risk mitigation in place. | E |
| Economic Capital | Solvency terms | International Actuarial Association | IAA - Acturial Aspects of ERM for Insurance Companies | The amount of capital a company requires to cover its obligations with a given degree of confidence over a specific time horizon. | E |
| Economic Capital | Solvency terms | International Actuarial Association | IAA Deriving Value from ORSA | The amount of capital a company requires to survive or to meet a business objective for a specified period of time and risk metric, given its risk profile. | E |
| Economic Capital | Solvency terms | International Risk Management Institute | IRMI Terms | Market value of assets minus fair value of liabilities. Used in practice as a risk-adjusted capital measure; specifically, the amount of capital required to meet an explicit solvency constraint (e.g., a certain probability of ruin). | E |
| Economic Capital | Solvency terms | The European Economic Area | Solvency II | Not specifically defined. The Solvency Capital Requirement should be determined as the economic capital to be held by insurance and reinsurance undertakings in order to ensure that ruin occurs no more often than once in every 200 cases or, alternatively, that those undertakings will still be in a position, with a probability of at least 99,5 %, to meet their obligations to policy holders and beneficiaries over the following 12 months. That economic capital should be calculated on the basis of the true risk profile of those undertakings, taking account of the impact of possible risk-mitigation techniques, as well as diversification effects. (Solvency II Directive (64)) | E |
| Economic Capital | Solvency terms | United States | U.S. ASB Terms | The amount of capital an organization requires to survive or to meet a business objective for a specified period of time and risk metric, given its risk profile. | E |
| Emerging Risk | Risk Categories | International Actuarial Association | IAA - Acturial Aspects of ERM for Insurance Companies | A risk which may develop or which may already exist that is difficult to quantify or may have a high loss potential | E |
| Enterprise Risk Management | General | COSO | COSO | The culture, capabilities, and practices, integrated with strategy-setting and its execution, that organizations rely on to manage risk in creating, preserving, and realizing value. | E |
| Enterprise Risk Management | General | IAIS | IAIS ICP 16 | The process of identifying, assessing, measuring, monitoring, controlling and mitigating risks. | E |
| Enterprise Risk Management | General | IAIS | IAIS Supervisory Material | The process and activities of identifying, assessing, measuring, monitoring, controlling and mitigating risks in respect of the insurer's enterprise as a whole. | E |
| Enterprise Risk Management | General | International Actuarial Association | IAA - Acturial Aspects of ERM for Insurance Companies | ERM is a continuous process. ERM adopts a holistic view to risk and assesses risk from the perspective of the company's aggregate position as well as from a standalone perspective. ERM is concerned with all risks, including those that are unquantifiable or difficult to quantify. ERM considers uncertainty from both a positive and negative viewpoint. ERM aims to achieve greater value for all stakeholders by assisting in achieving an appropriate risk-reward balance. ERM considers both the short term and the long term aspects of risk. | E |
| Enterprise Risk Management | General | The European Economic Area | Solvency II | Not specifically defined. Insurance and reinsurance undertakings shall have in place an effective risk-management system comprising strategies, processes and reporting procedures necessary to identify, measure, monitor, manage and report, on a continuous basis the risks, at an individual and at an aggregated level, to which they are or could be exposed, and their interdependencies. (Solvency II Directive art. 45) | E |
| Enterprise Risk Management | General | United States | U.S. ASB Terms | The discipline by which an organization in any industry assesses, controls, exploits, finances, and monitors risks from all sources for the purpose of increasing the organization's short- and long-term value to its stakeholders. | E |
| Equity Risk | Risk Categories | International Actuarial Association | IAA - Acturial Aspects of ERM for Insurance Companies | The risk of loss associated with exposure to an adverse movement in equity prices | E |
| Framework (ERM Framework) | General | COSO | COSO | The five components consisting of (1) Risk Governance and Culture; (2) Risk, Strategy, and Objective-Setting; (3) Risk in Execution; (4) Risk Information, Communication, and Reporting; and (5) Monitoring Enterprise Risk Management Performance. | F |
| Fungibility | Solvency terms | The European Economic Area | CEA Solvency II | Fungible Capital - That part of the capital of a group which can be transferred between different legal entities of the group. | F |
| Fungibility | Solvency terms | United States | NAIC ORSA MANUAL | Within a group context, the ability to redeploy available capital from one entity to another. Fungibility is reduced where the movement of available capital within the group is constrained or regulation prohibits it. | F |
| Fungible Capital (see Fungibility) | Solvency terms | The European Economic Area | CEA Solvency II | That part of the capital of a group which can be transferred between different legal entities of the group. | F |
| Group Capital | Solvency terms | United States | NAIC ORSA MANUAL | Group capital represents the aggregate available capital or risk capital for the entire group. It will be impacted by the interaction of the risks and capital of the individual entities within the group, with properties such as diversification, fungibility and the quality and form of capital being important drivers. | G |
| Group Risk | Risk Categories | International Actuarial Association | IAA - Acturial Aspects of ERM for Insurance Companies | The risk of loss associated with exposure to other group companies | G |
| Inflation Risk | Risk Categories | International Actuarial Association | IAA - Acturial Aspects of ERM for Insurance Companies | The risk of loss associated with exposure to an adverse movement in inflation | I |
| Insurance Risk (see Underwriting Risk) | Risk Categories | China | CIRC C-ROSS Conceptual Framework | The risk of losses caused by adverse deviation from expected experience of mortality, morbidity, loss ratio, lapse, etc. | I |
| Insurance Risk (see Underwriting Risk) | Risk Categories | IAIS | IAIS Supervisory Material | (Insurance Risk, Technical Risks) Represent the various kinds of risk that are directly or indirectly associated with the technical or actuarial bases of calculation for premiums and technical provisions in both life and non-life insurance, as well as risks associated with operating expenses and excessive or uncoordinated growth. Technical risks result directly from the type of insurance business transacted. They differ depending on the class of insurance. Technical risks exist partly due to factors outside the company's area of business activities, and the company often may have little influence over these factors. The effect of such risks - if they materialise - is that the company may no longer be able to fully meet the guaranteed obligations using the funds established for this purpose, because either the claims frequency, the claims amounts, or the expenses for administration and settlement are higher than expected. (Underwriting Risk) Includes claims, expense and reserving risks and the risks associated with guarantees and options embedded in policies. | I |
| Insurance Risk (see Underwriting Risk) | Risk Categories | The European Economic Area | Solvency II | See Underwriting Risk | I |
| Insurance Risk (see Underwriting Risk) | Risk Categories | United States | U.S. ASB Terms | The extent to which the level or timing of actual insurance cash flows is likely to differ from expected insurance cash flows. | I |
| Interest Rate Risk | Risk Categories | International Actuarial Association | IAA - Acturial Aspects of ERM for Insurance Companies | The risk of loss associated with exposure to adverse movements in interest rates | I |
| Liquidity Risk | Risk Categories | China | CIRC C-ROSS Conceptual Framework | The risk that an insurance undertaking is unable to obtain sufficient funds in a timely manner, or is unable to obtain sufficient fund at a reasonable cost in a timely manner, in order to meet the liabilities when they fall due. | L |
| Liquidity Risk | Risk Categories | IAIS | IAIS Supervisory Material | The risk that an insurer is unable to realise its investments and other assets in a timely manner in order to settle its financial obligations as they fall due. | L |
| Liquidity Risk | Risk Categories | International Actuarial Association | IAA - Acturial Aspects of ERM for Insurance Companies | Liquidity risk the risk associated with the ability to trade a particular asset quickly without incurring a loss | L |
| Liquidity Risk | Risk Categories | International Risk Management Institute | IRMI Terms | Exposure to adverse cost or return variation stemming from the lack of marketability of a financial instrument at prices in line with recent sales. | L |
| Liquidity Risk | Risk Categories | The European Economic Area | CEA Solvency II | The risk stemming from the lack of marketability of an investment that cannot be bought or sold quickly enough to prevent or minimize a loss. | L |
| Liquidity Risk | Risk Categories | The European Economic Area | Solvency II | The risk that insurance and reinsurance undertakings are unable to realise investments and other assets in order to settle their financial obligations when they fall due. (Solvency II Directive art. 13(34)) | L |
| Market Risk | Risk Categories | China | CIRC C-ROSS Conceptual Framework | The risk of unexpected losses arising from adverse changes in interest rates, FX, equity, commodity, etc. | M |
| Market Risk | Risk Categories | IAIS | IAIS Supervisory Material | The risk to an insurer's financial condition arising from movements in the level or volatility of market prices of assets, liabilities and financial instruments, whether on all investments as a whole (general market risk) or on an individual investment (specific market risk). | M |
| Market Risk | Risk Categories | International Actuarial Association | IAA - Acturial Aspects of ERM for Insurance Companies | The risk of loss arising from changes in market variables. | M |
| Market Risk | Risk Categories | International Risk Management Institute | IRMI Terms | Exposure to uncertainty due to changes in rate or market price of an invested asset (e.g., interest rates, equity values). | M |
| Market Risk | Risk Categories | The European Economic Area | CEA Solvency II | The risk of changes in values caused by market prices or volatilities of market prices differing from their expected values. | M |
| Market Risk | Risk Categories | The European Economic Area | PRA Rulebook | means the risk of loss or of adverse change in the financial situation resulting, directly or indirectly, from fluctuations in the level and in the volatility of market prices of assets, liabilities and financial instruments. | M |
| Market Risk | Risk Categories | The European Economic Area | Solvency II | The risk of loss or of adverse change in the financial situation resulting, directly or indirectly, from fluctuations in the level and in the volatility of market prices of assets, liabilities and financial instruments. (Solvency II Directive art. 13(31)) | M |
| Minimum Capital Requirement | Solvency terms | China | CIRC C-ROSS Conceptual Framework | The amount of capital required according to the regulations to cover the adverse impact on the undertaking's solvency capability arising from market risk, credit risk, insurance risk, etc. | M |
| Minimum Capital Requirement | Solvency terms | IAIS | IAIS Supervisory Material | In the context of a legal entity's capital adequacy assessment, the level of solvency at which, if breached, the supervisor would invoke its strongest actions, in the absence of appropriate corrective action by the insurer. | M |
| Minimum Capital Requirement | Solvency terms | The European Economic Area | CEA Solvency II | The capital level representing the final threshold that triggers ultimate supervisory measures in the event that it is breached. | M |
| Minimum Capital Requirement | Solvency terms | The European Economic Area | Solvency II | A minimum level of security below which the amount of financial resources should not fall (Solvency II Directive (60)). | M |
| Model Risk | Risk Categories | International Actuarial Association | IAA ISAP | The risk that, due to deficiency in the model or in its use, an intended user of the results of the model will draw an incorrect conclusion from those results | M |
| Operational Risk | Risk Categories | China | CIRC C-ROSS Conceptual Framework | The risk of direct or indirect losses due to inadequate internal processes, personnel and systems or from external events, including legal and supervisory compliance risk (but excluding strategic risk and reputational risk). | O |
| Operational Risk | Risk Categories | IAIS | IAIS Supervisory Material | The risk arising from the inadequacy or failure of internal systems, personnel, procedures or controls leading to financial loss. Operational risk also includes custody risk. | O |
| Operational Risk | Risk Categories | International Actuarial Association | IAA - Acturial Aspects of ERM for Insurance Companies | The risk of loss from failed or inadequate internal processes, people and systems, or from external events. | O |
| Operational Risk | Risk Categories | International Risk Management Institute | IRMI Terms | The risk of loss from everything other than credit, market, and interest rate risks. It is the risk of human, process, system, or technological failure as well as risks from external events (i.e., event risk). | O |
| Operational Risk | Risk Categories | The European Economic Area | CEA Solvency II | Risk of a change in value caused by the fact that actual losses, incurred for inadequate or failed internal processes, people and systems, or from external events (including legal risk), differ from the expected losses. | O |
| Operational Risk | Risk Categories | The European Economic Area | PRA Rulebook | means the risk of loss arising from inadequate or failed internal processes, personnel or systems, or from external events, including legal risks which, for the purposes of Solvency Capital Requirement - General Provisions 3.3(1), includes legal risks but excludes risks arising from strategic decisions and reputational risks | O |
| Operational Risk | Risk Categories | The European Economic Area | Solvency II | The risk of loss arising from inadequate or failed internal processes, personnel or systems, or from external events. (Solvency II Directive art. 13(33)) | O |
| Own Risk and Solvency Assessment (ORSA) | General | IAIS | IAIS ICP 16 | The assessment of whether an insurer's risk management and solvency position is currently adequate and is likely to remain so in the future. | O |
| Own Risk and Solvency Assessment (ORSA) | General | International Actuarial Association | IAA - Acturial Aspects of ERM for Insurance Companies | A company's assessment of its risks and of the solvency needs associated with those risks | O |
| Own Risk and Solvency Assessment (ORSA) | General | The European Economic Area | Solvency II | That assessment shall include at least the following:(a) the overall solvency needs taking into account the specific risk profile, approved risk tolerance limits and the business strategy of the undertaking, (b) the compliance, on a continuous basis, with the capital requirements, (c) the significance with which the risk profile of the undertaking concerned deviates from the assumptions underlying the Solvency Capital Requirement, calculated with the standard formula or with its partial or full internal model. (Solvency II Directive art. 45.1, text adjusted) | O |
| Own Risk and Solvency Assessment (ORSA) | General | United States | NAIC ORSA MANUAL | A component of an insurer's enterprise risk management (ERM) framework, is a confidential internal assessment appropriate to the nature, scale and complexity of an insurer conducted by that insurer of the material and relevant risks identified by the insurer assuciated with an insurer's current business plan and the sufficiency of capital resources to support those risks. | O |
| Probability of Ruin | Methods | International Risk Management Institute | IRMI Terms | The percentile of the probability distribution corresponding to the point at which capital is exhausted. Typically, a minimum acceptable probability of ruin is specified, and economic capital is derived therefrom. | P |
| Probability of Ruin | Methods | The European Economic Area | CEA Solvency II | Risk measure. The likelihood that total net cash outflows exceed at any time the available resources starting with a given amount of resources, within a specified time horizon. | P |
| Probability of Ruin | Methods | The European Economic Area | Solvency II | 'Risk measure' means a mathematical function which assigns a monetary amount to a given probability distribution forecast and increases monotonically with the level of risk exposure underlying that probability distribution forecast.(Solvency II Directive art. 13(39)) | P |
| Probability of Ruin | Methods | United States | NAIC ORSA MANUAL | Likelihood of liabilities exceeding assets for a given time horizon. | P |
| Regulatory Risk | Risk Categories | International Actuarial Association | IAA - Acturial Aspects of ERM for Insurance Companies | The risk arising from changes in regulation or legislation | R |
| Reputational Risk | Risk Categories | China | CIRC C-ROSS Conceptual Framework | The risk of losses due to negative evaluation of insurance undertakings by relevant stakeholders resulting from the insurance undertakings operation or external events. | R |
| Reputational Risk | Risk Categories | International Actuarial Association | IAA - Acturial Aspects of ERM for Insurance Companies | The risk that events could have an adverse impact on an organisation's reputation or brand value. | R |
| Reputational Risk | Risk Categories | International Risk Management Institute | IRMI Terms | The risk that negative publicity regarding an institution's business practices will lead to a loss of revenue or increased litigation. | R |
| Reputational Risk | Risk Categories | The European Economic Area | CEA Solvency II | Type of business risk. The risk that adverse publicity regarding an insurer's business practices and associations, whether accurate or not, will cause a loss of confidence in the integrity of the institution. | R |
| Residual Risk | Risk Categories | International Actuarial Association | IAA - Acturial Aspects of ERM for Insurance Companies | The risk remaining with an organisation following its risk management process and internal controls. | R |
| Reverse Stress Testing | Methods | COSO | COSO | The possibility that events will occur and affect the achievement of strategy and business objectives | R |
| Reverse Stress Testing | Methods | IAIS | IAIS ICP 16 | Reverse stress testing identifies scenarios that are most likely to cause an insurer to fail. Such an approach may help to ensure adequate focus on the management actions that are appropriate to avoid undue risk of business failure. The focus of such reverse stress testing may be largely qualitative in nature although broad assessment of associated financial impacts may help in deciding the appropriate action to take. | R |
| Reverse Stress Testing | Methods | International Actuarial Association | IAA ISAP | A process for identifying events or scenarios that would lead to a predetermined financial indicator for an organization (draft) | R |
| Reverse Stress Testing | Methods | The European Economic Area | Solvency II | The term is mentioned in the Guidelines on the ORSA, but has not been defined explicitly. | R |
| Risk | Risk Categories | COSO | COSO | The possibility that events will occur and affect the achievement of strategy and business objectives | R |
| Risk | Risk Categories | International Actuarial Association | IAA Deriving Value from ORSA | The potential of future losses or shortfalls from expectations due to the deviation of actual from expected results. | R |
| Risk | Risk Categories | United States | U.S. ASB Terms | The potential of future losses or shortfalls from expectations due to deviation of actual results from expected results. | R |
| Risk Appetite | General | COSO | COSO | The types and amount of risk, on a broad level, an organization is willing to accept in pursuit of value. | R |
| Risk Appetite | General | Financial Stability Board | FSB Principles for an Effective Risk Appetite | The aggregate level and types of risk a financial institution is willing to assume within its risk capacity to achieve its strategic objectives and business plan. | R |
| Risk Appetite | General | IAIS | IAIS Supervisory Material | The aggregate level and types of risk an insurer is willing to assume within its risk capacity to achieve its strategic objectives and business plan. | R |
| Risk Appetite | General | International Actuarial Association | IAA - Acturial Aspects of ERM for Insurance Companies | The level and type of risk that an organization is willing to accept in order to achieve its objectives. | R |
| Risk Appetite | General | International Actuarial Association | IAA Deriving Value from ORSA | The level of aggregate risk that a company chooses to take in pursuit of its objectives. | R |
| Risk Appetite | General | International Risk Management Institute | IRMI Terms | The degree to which an organization's management is willing to accept the uncertainty of loss for a given risk when it has the option to pay a fixed sum to transfer that risk to an insurer. | R |
| Risk Appetite | General | United States | NAIC ORSA MANUAL | Documents the overall principles that a company follows with respect to risk-taking, given its business strategy, financial soundness objectives and capital resources. Often stated in qualitative terms, a risk appetite defines how an organization weighs strategic decisions and communicates its strategy to key stakeholders with respect to risk-taking. It is designed to enhance management's ability to make informed and effective business decisions while keeping risk exposures within acceptable boundaries. | R |
| Risk Appetite | General | United States | U.S. ASB Terms | The level of aggregate risk that an organization chooses to take in pursuit of its objectives. | R |
| Risk Appetite Framework | General | Financial Stability Board | FSB Principles for an Effective Risk Appetite | The overall approach, including policies, processes, controls, and systems through which risk appetite is established, communicated, and monitored. It includes a risk appetite statement, risk limits, and an outline of the roles and responsibilities of those overseeing the implementation and monitoring of the RAF. The RAF should consider material risks to the financial institution, as well as to the institution's reputation vis-à-vis policyholders, depositors, investors and customers. The RAF aligns with the institution's strategy | R |
| Risk Appetite Statement | General | Financial Stability Board | FSB Principles for an Effective Risk Appetite | The articulation in written form of the aggregate level and types of risk that a financial institution is willing to accept, or to avoid, in order to achieve its business objectives. It includes qualitative statements as well as quantitative measures expressed relative to earnings, capital, risk measures, liquidity and other relevant measures as appropriate. It should also address more difficult to quantify risks such as reputation and conduct risks as well as money laundering and unethical practices. | R |
| Risk Capacity | Solvency terms | Financial Stability Board | FSB Principles for an Effective Risk Appetite | The maximum level of risk the financial institution can assume given its current level of resources before breaching constraints determined by regulatory capital and liquidity needs, the operational environment (e.g. technical infrastructure, risk management capabilities, expertise) and obligations, also from a conduct perspective, to depositors, policyholders, shareholders, fixed income investors, as well as other customers and stakeholders. | R |
| Risk Capacity | Solvency terms | International Actuarial Association | IAA - Acturial Aspects of ERM for Insurance Companies | The extent of risk that an organisation is capable of undertaking | R |
| Risk Capital | Solvency terms | International Actuarial Association | IAA - Acturial Aspects of ERM for Insurance Companies | Risk Based Capital (RBC) Capital Requirements that reflect the risk profile of the financial institutions. | R |
| Risk Capital | Solvency terms | International Risk Management Institute | IRMI Terms | Capital required to finance the consequences of business risks. | R |
| Risk Capital | Solvency terms | The European Economic Area | Solvency II | The term is mentioned once in de Directive (Solvency II Directive (50)), but has not been defined. | R |
| Risk Capital | Solvency terms | United States | NAIC ORSA MANUAL | An amount of capital calculated to be sufficient to withstand adverse outcomes associated with various risks of an enterprise, up to a pre-defined security standard. | R |
| Risk Exposure | General | The European Economic Area | Solvency II | The term is mentioned in de Directive, but has not been defined explicitly. | R |
| Risk Exposure | General | United States | NAIC ORSA MANUAL | For each risk listed in the company's risk profile, the amount the company stands to lose due to that particular risk at a particular time, as indicated by a chosen metric. | R |
| Risk Limit | General | COSO | COSO | The maximum amount of risk that an entity is able to absorb in the pursuit of strategy and business objectives. | R |
| Risk Limit | General | Financial Stability Board | FSB Principles for an Effective Risk Appetite | Quantitative measures based on forward looking assumptions that allocate the financial institution's aggregate risk appetite statement (e.g. measure of loss or negative events) to business lines, legal entities as relevant, specific risk categories, concentrations, and as appropriate, other levels. | R |
| Risk Limit | General | IAIS | IAIS Supervisory Material | The level of risk to which the insurer is prepared to be exposed. The risk measure might be a supervisory one or an internal one or a combination of both. | R |
| Risk Limit | General | International Actuarial Association | IAA - Acturial Aspects of ERM for Insurance Companies | The maximum amount of risk that can be underwritten. Risk limits will often be identified for key risk-taking activities such as insurance underwriting and investment. | R |
| Risk Limit | General | United States | NAIC ORSA MANUAL | Typically quantitative boundaries that control the amount of risk that a company takes. Risk limits are typically more granular than risk tolerances and may be expressed at various levels of aggregation: by type of risk, category within a type of risk, product or line of business, or some other level of aggregation. Risk limits should be consistent with the company's overall risk tolerance. | R |
| Risk Limit | General | United States | U.S. ASB Terms | A threshold used to monitor the actual risk expousre of a specific unit or units of the organization to ensure that the level of aggregate risk remains within the risk tolerance. | R |
| Risk Profile | General | COSO | COSO | A composite view of the risk assumed at a particular level of the entity, or aspect of the business model that positions management to consider the types, severity, and interdependencies of risks, and how they may affect performance relative to its strategy and business objectives. | R |
| Risk Profile | General | Financial Stability Board | FSB Principles for an Effective Risk Appetite | Point in time assessment of the financial institution's gross and, as appropriate, net risk exposures (after taking into account mitigants) aggregated within and across each relevant risk category based on forward looking assumptions. | R |
| Risk Profile | General | International Actuarial Association | IAA - Acturial Aspects of ERM for Insurance Companies | A description of the risk exposures of an organization. | R |
| Risk Profile | General | International Actuarial Association | IAA Deriving Value from ORSA | The characteristics of the material and relevant risks to which a company is exposed over a specified period of time. | R |
| Risk Profile | General | The European Economic Area | Solvency II | The term is used a lot in de Directive, but has not been defined explicitly. | R |
| Risk Profile | General | United States | NAIC ORSA MANUAL | A delineation and description of the material risks to which an organization is exposed. | R |
| Risk Tolerance | General | IAIS | IAIS Supervisory Material | Used to include the active retention of risk that is appropriate for an insurer in the context of its strategy, financial strength, and the nature, scale and complexity of its business and risks. Risk tolerance is typically a percentage of the absolute risk bearing capacity for an insurer. | R |
| Risk Tolerance | General | International Actuarial Association | IAA - Acturial Aspects of ERM for Insurance Companies | A quantitative description of the extent of risk that the company is willing to take in respect of a specific risk. | R |
| Risk Tolerance | General | International Risk Management Institute | IRMI Terms | The willingness of an organization to incur risk to gain future reward. | R |
| Risk Tolerance | General | The European Economic Area | Solvency II | The term risk tolerance limit is used in de Directive itself and Guidelines on the ORSA, but has not been defined explicitly. (Solvency II Directive art. 45 on ORSA) | R |
| Risk Tolerance | General | United States | NAIC ORSA MANUAL | The company's qualitative and quantitative boundaries around risk-taking, consistent with its risk appetite. Qualitative risk tolerances are useful to describe the company's preference for, or aversion to, particular types of risk, particularly for those risks that are difficult to measure. Quantitative risk tolerances are useful to set numerical limits for the amount of risk that a company is willing to take. | R |
| Risk Tolerance | General | United States | U.S. ASB Terms | The aggregate risk-taking capacity of an organization. | R |
| Scenario Analysis | Methods | IAIS | IAIS Supervisory Material | A 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 Analysis | Methods | The European Economic Area | CEA Solvency II | Simulation of an alternative set of parameters within a model in order to establish the impact on the outcome. | S |
| Scenario Analysis | Methods | The European Economic Area | Solvency II | The term is mentioned in the Guidelines on the ORSA, but has not been defined explicitly. | S |
| Scenario Analysis | Methods | United States | NAIC ORSA MANUAL | Analysis 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 Analysis | Methods | United States | U.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 |
| Solvency | Solvency terms | IAIS | IAIS Supervisory Material | Ability 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 |
| Solvency | Solvency terms | International Actuarial Association | IAA Deriving Value from ORSA | The adequacy of available economic or regulatory capital to meet future obligations or regulatory requirements. | S |
| Solvency | Solvency terms | United States | NAIC ORSA MANUAL | For a given accounting basis, the state where, and extent to which, assets exceed liabilities. | S |
| Solvency Capital Requirement | Solvency terms | The European Economic Area | CEA Solvency II | The amount of capital to be held by an insurer to meet the Pillar I requirements under the Solvency II regime. | S |
| Solvency Capital Requirement | Solvency terms | The European Economic Area | Solvency II | The 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 Analysis | Methods | IAIS | IAIS Supervisory Material | A 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 Analysis | Methods | United States | NAIC ORSA MANUAL | A 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 Risk | Risk Categories | China | CIRC C-ROSS Conceptual Framework | The 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 Risk | Risk Categories | International Actuarial Association | IAA - Acturial Aspects of ERM for Insurance Companies | The risk in relation to the achievement of an organisation's strategic business plan and objectives. | S |
| Strategic Risk | Risk Categories | International Risk Management Institute | IRMI Terms | Exposure to uncertainty arising from long-term policy decisions. | S |
| Strategic Risk | Risk Categories | The European Economic Area | CEA Solvency II | Type 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 Test | Methods | IAIS | IAIS ICP 16 | The method of measuring the financial impact of stressing one or relatively few factors affecting the insurer. | S |
| Stress Test | Methods | IAIS | IAIS Supervisory Material | The 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 Test | Methods | International Actuarial Association | IAA ISAP | A 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 Test | Methods | The European Economic Area | CEA Solvency II | A type of scenario analysis in which the change in parameters are considered significant, or even extreme. | S |
| Stress Test | Methods | The European Economic Area | Solvency II | The term is mentioned in the Guidelines on the ORSA, but has not been defined explicitly. | S |
| Stress Test | Methods | United States | NAIC ORSA MANUAL | A type of scenario analysis in which the change in parameters is considered significantly adverse or even extreme. | S |
| Stress Test | Methods | United States | U.S. ASB Terms | A process for measuring the impact of adverse changes in one or relatively few factors affecting an organization's financial position. | S |
| Time Horizon | Methods | International Actuarial Association | IAA - Acturial Aspects of ERM for Insurance Companies | The time period associated with a given decision or measure. | T |
| Time Horizon | Methods | The European Economic Area | CEA Solvency II | The period over which any amount of required capital is held in order to cover losses, within a given risk tolerance level. | T |
| Time Horizon | Methods | United States | NAIC ORSA MANUAL | In the context of risk capital calculations, the period over which the impact of changes to risks is tested. | T |
| Underwriting Risk | Risk Categories | IAIS | IAIS ICP 16 | in a broad sense and includes claims, expense and reserving risks and the risks associated with guarantees and options embedded in policies | U |
| Underwriting Risk | Risk Categories | IAIS | IAIS Supervisory Material | Includes claims, expense and reserving risks and the risks associated with guarantees and options embedded in policies. | U |
| Underwriting Risk | Risk Categories | International Actuarial Association | IAA - Acturial Aspects of ERM for Insurance Companies | The risk of loss arising from movement in insurance variables including claim incidence, claim termination and persistency. | U |
| Underwriting Risk | Risk Categories | The European Economic Area | PRA Rulebook | The risk of loss or of adverse change in the value of insurance liabilities, due to inadequate pricing and provisioning assumptions. | U |
| Underwriting Risk | Risk Categories | The European Economic Area | Solvency II | The risk of loss or of adverse change in the value of insurance liabilities, due to inadequate pricing and provisioning assumptions. (Solvency II Directive art. 13(30) | U |
| Value-at-Risk (see also TailVaR) | Methods | IAIS | IAIS Supervisory Material | An estimate of the worst expected loss over a certain period of time at a given confidence level. | V |
| Value-at-Risk (see also TailVaR) | Methods | International Actuarial Association | IAA - Acturial Aspects of ERM for Insurance Companies | The maximum loss that could occur with a specified probability over a given time horizon. | V |
| Value-at-Risk (see also TailVaR) | Methods | International Risk Management Institute | IRMI Terms | The worst loss expected over a target horizon within a given confidence interval. | V |
| Value-at-Risk (see also TailVaR) | Methods | The European Economic Area | CEA Solvency II | Value-at-risk is a quantile of a distribution and used as a (non-coherent) risk measure. | V |
| Value-at-Risk (see also TailVaR) | Methods | The European Economic Area | Solvency II | The term is mentioned in the Directive, but has not been defined explicitly. Article 104.4 says: Each of the risk modules referred to in paragraph 1 shall be calibrated using a Value-at-Risk measure, with a 99,5 % confidence level, over a one-year period. | V |
| Value-at-Risk (see also TailVaR) | Methods | United States | NAIC ORSA MANUAL | An estimate of the maximum loss over a certain period of time at a given confidence level. | V |