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
Risk LimitGeneralCOSOCOSOThe maximum amount of risk that an entity is able to absorb in the pursuit of strategy and business objectives.R
Risk LimitGeneralFinancial Stability BoardFSB Principles for an Effective Risk AppetiteQuantitative 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 LimitGeneralIAISIAIS Supervisory MaterialThe 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 LimitGeneralInternational Actuarial AssociationIAA - Acturial Aspects of ERM for Insurance CompaniesThe 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 LimitGeneralUnited StatesNAIC ORSA MANUALTypically 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 LimitGeneralUnited StatesU.S. ASB TermsA 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