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.

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Glossary
TermGroupingOrganization or Jurisdiction Defining TermSource of DefinitionDefinition
Credit Risk (Counterparty Risk)Risk CategoriesCanadaOSFI Manual of ReportingThe risk that a borrower may default on his credit obligations to the lender.C
Credit Risk (Counterparty Risk)Risk CategoriesChinaCIRC C-ROSS Conceptual FrameworkThe 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 CategoriesIAISIAIS Supervisory MaterialThe 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 CategoriesInternational Actuarial AssociationIAA - Acturial Aspects of ERM for Insurance CompaniesThe risk that a counterparty will be unable or unwilling to make payments due under a specific agreementC
Credit Risk (Counterparty Risk)Risk CategoriesInternational Risk Management InstituteIRMI TermsThe 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 CategoriesThe European Economic AreaCEA Solvency IIThe 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 CategoriesThe European Economic AreaPRA RulebookThe 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 concentrationsC
Credit Risk (Counterparty Risk)Risk CategoriesThe European Economic AreaSolvency IIThe 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 CategoriesUnited StatesU.S. ASB TermsRisk associated with the possibility of a loss on an investment arising from a borrower who does not make payments as promised.C