Consistent performance measurement: aligning risk, value and capital management
- Document type
- Corporate author(s)
- Towers Watson
- Towers Watson
- Date of publication
- 15 February 2010
- Embedding ERM
- Management & leadership: including strategy, public sector management, operations and production
- Business and management
- Material type
This article argues that using a consistent approach to performance management is an essential part of both embedding enterprise risk management (ERM) and demonstrating its value. By taking this route, management can gain a more uniform view of how each product in its portfolio is performing, and make better decisions about pricing, product strategy and capital budgeting. And by linking financial targets to organizational roles, management can also link performance to pay. The article describes an analytical framework that can be applied to an insurer's internal measurement and management system to align risk, value assessment and capital management. Using this framework for setting financial targets and monitoring performance will allow companies to differentiate between their insurance and investment operations, and the value of the current year's underwriting activity (versus the runoff of existing business).
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