2014 Convention knowing more 22-23 October, Cape Town

A Day in the Life of an ERM Savvy Executive

Wayne Savage

Philip van den Berg

Lindy Schmaman

2014 Convention knowing more 22-23 October, Cape Town

Agenda

1. Introduction

2. Scene 1

3. Scene 2

4. Scene 3

5. Conclusion

2

2014 Convention knowing more 22-23 October, Cape Town

Role Play

3

Wayne - The not-so risk-savvy executive

Phil – The risk savvy executive

2014 Convention knowing more 22-23 October, Cape Town

Scene 1 – Business performance

over the last quarter

4

• Volume of new business 20%

• VNB margin 8% • Market share • Sales • Cross Sales

2014 Convention knowing more 22-23 October, Cape Town

Scene 1 – Business performance

over the last quarter

5

LSM Bands 1 – 4

Increased lapse risk

No Data => Proxy pricing

2014 Convention knowing more 22-23 October, Cape Town

Scene 1 – Business performance

over the last quarter

6

Primary driver of value is the expected cashflows

Understand the volatility of the cashflows

Hold capital for that volatility

Focus on increasing value rather than market share

Consider capital costs in pricing

Enhance data and processes

Performance structures reflect value and risk

[Member Firms and DTTL: Insert appropriate copyright]

[Member Firms and DTTL: Insert appropriate copyright]

Actual Risk Profile Target Risk Profile

VALUE

Monitoring and Reporting Performance Targets

[Member Firms and DTTL: Insert appropriate copyright]

2014 Convention knowing more 22-23 October, Cape Town

Scene 2 –Potential acquisition

10

Increase in assets under management

Healthy earnings growth

Financials

2014 Convention knowing more 22-23 October, Cape Town

Scene 2 – Potential Acquisition

11

Market, Credit, Property, Operational

Regulatory and market conduct risks

Systems and infrastructure

Model governance

[Member Firms and DTTL: Insert appropriate copyright]

[Member Firms and DTTL: Insert appropriate copyright]

[Member Firms and DTTL: Insert appropriate copyright]

2014 Convention knowing more 22-23 October, Cape Town

Scene 3 – Stress testing

15

2014 Convention knowing more 22-23 October, Cape Town

Scene 3 – Stress testing

16

Appetite

Trigger

Trigger

Trigger

Trigger

2014 Convention knowing more 22-23 October, Cape Town

Scene 3 – Stress testing

17

Break our business model

Stress testing

What could cause this?

Identify management actions & challenge

strategy

[Member Firms and DTTL: Insert appropriate copyright]

[Member Firms and DTTL: Insert appropriate copyright]

Visual Narrative

2014 Convention knowing more 22-23 October, Cape Town

Concluding thoughts

20

[Member Firms and DTTL: Insert appropriate copyright]

3

21 Deloitte Greenhouse PowerPoint

timesaver – October 2013

1. Enhancement to

data architecture and

IT infrastructure

[Member Firms and DTTL: Insert appropriate copyright]

2

2

2. Align risk and

business processes

[Member Firms and DTTL: Insert appropriate copyright]

Visual Narrative 3. Finance, risk

and business

need to team up

2014 Convention knowing more 22-23 October, Cape Town 24

Thank you

Questions?