Page 103 - Risk Management in current scenario

successful implementation of RBC, Sri Lankan market has felt some
challenges in garnering the actuarial resources. Senior Management
involvement is very important in the implementation of RBC. Use of
scenario testing and risk appetite is important in decision making.
Employing disciplined process of setting actuarial assumption helps in
reducing future volatility in profit emergence and capital requirement.

Strengthening Customer Experience

Better customer experience helps in improving the customer's loyalty;
this also brings more loyal customer through family and friends. In the
western market, it has been found that the lapse rate of loyal customers
is half of rest of the population. Such initiatives help in optimizing capital
and profit.

Better expense management with lower operating expense helps in
releasing the capital. This can be performed by improving /T capabilities,
better fraud management, enhancing front line sales training, errorfree
processing.

Operational risk
The quantification of operational risk is challenging for most of the
markets, however many markets have developed Risk Control Self
Assessment process and created a probability and loss amount grid as a
part of Common materiality framework to address the operational risk
issues.

Final thoughts
In the end, we need to ask some fundamental questions, whether the
implementation of capital as a function of risk would make solvency
dynamic with changes in the risk factors for which the regulatory changes
are implemented around the world. Will it able to spot Bank Swan?

— z —

Risk Management in Current Scenario | 101