The Evolutionary Development of Risk Frameworks: Mark Struck

For actuaries, every practice area offers unique challenges and opportunities, and enterprise risk management (ERM) is no exception.

For Mark Struck (pictured), vice-president of ERM at Wawanesa Mutual Insurance, those challenges included convincing colleagues of the value of a risk management framework—something that is becoming increasingly important in today’s market.

He has worked in this field for three years, coming from a traditional pricing/reserving actuarial background, and said: "It wasn’t difficult for me to embrace ERM; a key responsibility for actuaries is interacting with different parts of a company. What was more difficult was changing my work regimen—I spent two years focusing on what the risk management machinery should look like, which meant stepping away from numbers. However, now we have closed the loop, and we have started to paint a financial picture of the risks we are facing.

"In my current role, I built our ERM practice from cradle to grave, and help the company manage risk on a day-to-day basis. By putting processes and assessments in place, we aim to get people thinking in terms of all the risks we face, and now they are having conversations that they would not have had two years ago.

"Implementing a risk management framework is an evolutionary process, but now we have some solid risk quantification and we can show what our balance sheet and income statement might look like under a wide variety of scenarios. We can put something concrete down on paper for people, and they develop a clearer sense of the company’s sensitivity to the range of risks we face."

The path to that finished result has not always been straightforward, added Mr. Struck, FCIA, FCAS, MAAA, who is based in Winnipeg, MB. "Modelling has been time-consuming, as the way you collect data is slightly different to normal actuarial work. To document all the risks you face, you have to enlist leaders from across the entire organization, which can be like the proverbial herding of cats.

"The core of risk management is determining those risks that could stand in the way of achieving the company’s strategies. This requires a broad perspective of the organization, and is most beneficial when people to think outside of their own silos. Given a typical corporate structure, this can be an unnatural task for some. Once leaders start to contemplate and understand how their work impacts the enterprise, they become more involved, and start to add value to the overall process."

Despite the appeal of this rapidly-expanding field and the opportunities it offered, Mr. Struck said it could still present challenges. "When you get into a room with non-actuaries, they can sometimes have this idea: ‘This is going to be a difficult conversation.’ You have to speak a different language at times. If you can make sense of the risk, and do so in a language that is familiar to your audience, it can be easier for people to understand the potential value of risk management.

"I thoroughly recommend ERM. Actuaries are very well situated to branch into it, as most actuarial work is already focusing on some of the company’s key risk factors, such as underwriting uncertainty, reserving, and market volatility. Stepping into ERM from pricing and reserving let me look holistically at the operations. Now I can add value by presenting the company’s complete risk profile."

Canadian Institute of Actuaries/Institut canadien des actuaires