While the U.S. insurance industry is making strides toward Risk Management and Own Risk Solvency Assessment Model Act (RMORSA) readiness, a survey conducted by PwC shows a gap appears to exist between the perception of RMORSA preparedness and the actual completeness of insurers' enterprise risk management frameworks.
PWC has just released its 2012 U.S. Insurance ERM & ORSA Readiness Survey.
The RMORSA Model Act, which is in the process of being implemented in state law, requires insurers to manage a comprehensive ERM framework that is embedded within company operations by January 2015. While 82 percent of survey respondents believe their existing ERM processes are largely adequate for the requirements, 38 percent of company boards are not engaged or are only passively engaged in risk management, showing that risk governance may not be up to RMORSA standards. In addition, 35 percent of companies indicated that they do not have a risk appetite linked to business strategy and financial goals, which is crucial to a comprehensive and effective ERM program, according to PwC.
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