Implementation and Uses of Economic Capital ... - ERM Symposium

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Evolution of usage for capital management Meeting the User Test Capital measurement Introduction of risk sensitive measures of capital requirements at corporate level First benefits: largely intangible insights into business steering Large scale risk avoidance can result in significant tangibles gains Business unit comparative profitability analysis Risk transfer optimization at the corporate level Pro-active approach to management of capital resources Capital management Embedding of the risk capital metrics in the day-to-day business unit operations Increasing uses in business units Business units realize implications of applying risk measurements Business units understand measures well enough to be able to plan using risk adjusted profitability
Evolution of usage for capital management Application Capital allocation and planning Strategic risk management ALM/ corporate investments Pricing Product design Risk transfer / mitigation strategy Performance management Executive compensation External communication Short term Mid term Corporate vs. BU Corporate Corporate BU/ corporate BU BU Corporate/ BU Corporate Corporate Corporate Long term Implementation horizon
Page 1 and 2: Use of Economic Capital for Perform
Page 3 and 4: Definition of Economic Capital (“
Page 5 and 6: Economic Capital is a more complete
Page 7 and 8: EC/ERM requires continually improvi
Page 9 and 10: The Executive Board defines Risk Ap
Page 11 and 12: Risk Dashboard provides an overview
Page 13 and 14: Example of EC approach within the R
Page 15 and 16: Concluding Remarks • ING has been
Page 17 and 18: Key technical elements of the EC me
Page 19 and 20: The rationale behind using a stress
Page 21 and 22: The key risks that financial servic
Page 23 and 24: Example of Stressing Key Risks: Equ
Page 25 and 26: Aggregating results across risks fo
Page 27: Linkage of EC with capital manageme
Page 31 and 32: It should be noted that this presen
Page 33 and 34: ERM’s efforts “connect the dots
Page 35 and 36: Rating Agencies Four major rating a
Page 37 and 38: Source: Citigroup Global Markets,
Page 39 and 40: European Insurers Report Increasing
Page 41 and 42: Economic Capital at AIG By focusing
Page 43 and 44: CRO Forum Recommendations Re EC Tim
Page 45 and 46: Assessment of Financial Strength of
Page 47 and 48: Economic Capital - the Importance o
Page 49 and 50: $BN 101.68 GAAP Shareholders' Equit
Page 51 and 52: $BN 25.0 20.0 15.0 10.0 5.0 0.0 AIG

Implementation and Uses of Economic Capital ... - ERM Symposium

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