CIA (e)Bulletin/(e)Bulletin de l'ICA
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January 2015

Spreading the Message on Managing Risk

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Traditional actuarial work helped Pierre-Paul Renaud (pictured) prepare for the world of enterprise risk management (ERM), but this increasingly important area has brought him a wealth of new challenges.

M. Renaud, FCIA, FSA, is now assistant vice-president of risk and quantitative analytics at Aviva Canada, reviewing and challenging models and helping to develop an operational risk model and risk management framework. His team also supports the Own Risk and Solvency Assessment and work related to Solvency II.

He began his career with the standard day-to-day tasks faced by most actuaries, and said: "I was responsible for developing and using financial models, and moving into ERM was a natural evolution: now financial models are reviewed in a more consistent manner and linked to the risk profile of the company, which involves many actuarial proficiencies.

"The challenge in ERM is helping the organization understand the risk it is taking and why it is taking such a risk, and linking quantitative and qualitative analyses. Working with other professionals in the team, and specialist risk managers, we can bring together different perspectives.

"We make sure that everybody has a good understanding of risk, and sometimes I must adjust my language to the way they perceive their risks. On the whole it is a straightforward process, and I am fortunate that groundwork on building an ERM program was already done, but there are still some areas where it can be difficult for people to understand what we are doing and how we are adding value. A few leaders [in the company] have been protective of their practice areas, and with good reason, and we have shown that we can help them by providing independent review. We can identify areas where there may be synergies or risks that they may not be fully aware of."

On a daily basis, that can involve working on many different projects. M. Renaud explained: "We’re looking at the risk environment and facilitating meetings with experts to identify risks. A fair amount of time is spent on risk reviews of models. We are also producing reports, essentially to help the chief risk officer confirm to the Board that the organization’s models and risk management processes and controls are fit for purpose."

Working in ERM requires a number of abilities that makes actuarial professionals well suited to such roles, he added. "You need to gain a broad understanding of the organization and the ability to drill down on specific issues, and not everybody is comfortable in such a role. You need to communicate very well with technical and non-technical people in a way that is respectful. You also need good problem-solving skills. Our team include people with interest in qualitative and quantitative risk management, from a variety of backgrounds. Actuaries have a risk and quantitative background to help assess risk and governance issues, and a general understanding of the business.

"ERM is important but we are still a relatively small team. Over time we have decided to hire more actuaries and improve our model governance. Company-wide, risk culture is critical and all employees have some responsibility for the management of risk."

The range of challenges makes ERM an interesting area for actuaries, he said. "There was push-back initially as people did not really appreciate how a more formal understanding of risk could help them. But now there are good prospects for actuaries if they are prepared to work on communicating with non-actuaries."


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