Enterprise Risk Consulting

RMS and ERisk provide a comprehensive suite of consulting and analytics solutions developed exclusively for enterprise risk management in the P&C insurance and reinsurance industry. The P&C RAROC framework delivers information and insight needed to help senior management maximize shareholder value by addressing strategic business questions such as:

	How much capital is needed to support my company’s enterprise-wide risks?
	Is my company over or under capitalized?
	Are individual business units creating or destroying shareholder value?
	What opportunities for growth or diversification exist within my company?
	How should the economics of the business be managed within regulatory and rating agency capital constraints?
	What is an optimal strategy for reinsurance?

The key output of a P&C RAROC analysis is a measure of Economic Capital, its attribution to different business activities, and the RAROC of each business activity. This information supports four key categories of business decisions:

	Capital Adequacy: A comparison of economic and available capital indicates whether and how much the firm is over / undercapitalized.
	Capital Consumption: P&C RAROC attributes Economic Capital to different business activities at any granularity based on risk contributions. This allows an understanding of how much capital is actually invested in various risk-taking activities.
	Shareholder Value: Business Units making a RAROC above the hurdle rate create shareholder value; those operating below the hurdle rate are identified for management action.
	Reinsurance Optimization: This involves modeling earnings volatility to evaluate various treaty reinsurance alternatives, by identifying the universe of potential reinsurance treaties, and then testing each one to determine its risk reduction efficiency.

Business Benefits

	Establish a capital strategy
	Manage business portfolios
	Evaluate mergers and acquisitions
	Identify capital that can be released or redeployed
	Include risk in pricing