Consistent performance measurement: aligning risk, value and capital management

Consistent performance measurement: aligning risk, value and capital management
Document type
Article
Corporate author(s)
Towers Watson
Publisher
Towers Watson
Date of publication
15 February 2010
Series
Embedding ERM
Subject(s)
Management & leadership: including strategy, public sector management, operations and production
Collection
Business and management
Material type
Reports

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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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