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Strategic Risk Management

Integrated Practices to Measure, Manage, andMonitor Risk

ACUMEN Information Services

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The Chief Risk Officer

Question: What are the marching orders of the ChiefRisk Officer?

Answer: Use caution to enhance, not impede, progress!

Source: Fortune Cookie

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Why is Risk Management Important?

• Generate stable (increasing) earnings• Desire for earnings that are accurate, predictable, and explainable• Ensure that product risks are adequately priced, including cost of

embedded risks• Avoid major surprises

• Ensure risk that creates excess volatility to earnings or capital areappropriately hedged, reinsured and provided for

• Find opportunities to take risks that meet criteria and provideappropriate rewards

• Take advantage of opportunities that exist at the company-widelevel to employ internal hedges

• Find opportunities to optimize regulatory capital• Defensive strengths – Offensive competitive advantages