New ASOP On Enterprise Risk Management

The Actuarial Standards Board has adopted its newest actuarial standard, ASOP 46, Risk Evaluation in Enterprise Risk Management. As defined in ASOP 46, "enterprise risk management" is

The discipline by which an organization in any industry assesses, controls, exploits, finances and monitors risks from all sources for the purpose of increasing the organization's short- and long-term value to its stakeholders.

The scope then of the new standard is defined as:

This standard applies to actuaries when performing risk evaluation professional services for the purposes of enterprise risk management (ERM).

Risk evaluation is often performed as one part of an ERM control cycle. Within a typical ERM control cycle, risks are identified, risks are evaluated, risk appetites are chosen, risk limits are set, risks are accepted or avoided, risk mitigation activities are performed, and actions are taken when risk limits are breached. Risks are monitored and reported as they are taken and as long as they remain an exposure to the organization.

This standard focuses on five aspects of risk...