Enterprise risk management system
A method and system ( 100 ) for identifying, measuring and managing the risk associated with a commercial enterprise.
1 . A risk method, comprising:
aggregating data from a plurality of management systems for a commercial enterprise, identifying a plurality of risks that may have an impact on a financial performance of said enterprise by analyzing at least a portion of said data, and
completing a series of tasks related to said risks where the tasks are selected from the group consisting of measuring said risks, identifying an optimal set of risk transfer transactions, identifying an optimal mode for operating one or more risk management control programs, completing an optimal set of risk transfer transactions, reporting said risks and combinations thereof
where a plurality of risks further comprise event risks and risks selected from the group consisting of contingent liabilities, strategic risks, variability risks, volatility and combinations thereof.
2 . The method of claim 1 wherein identifying an optimal set of risk transfer transactions further comprise identifying a set of transactions selected from the group consisting of insurance policy transactions, swap transactions, derivative transactions, contingent capital transactions and combinations thereof.
3 . The method of claim 1 wherein measuring a plurality of identified risks further comprises developing a plurality of scenarios selected from the group consisting of normal, extreme, regulatory and combinations thereof for a commercial enterprise financial performance and simulating the performance of the commercial enterprise by segment of value under each scenario as required to measure the impact of each risk from the plurality of risks where the segments of value are selected from the group consisting of current operation, real option, derivative, investment, market sentiment and combinations thereof.
4 . The method of claim 1 that further comprises:
obtaining a set of measured risks for a plurality of customers, a set of regulatory requirements and a plurality of performance data for a risk transfer operation,
generating a plurality of scenarios for a risk transfer operation performance using the performance data, regulatory requirements and customer risk data;
identifying and displaying an optimal mode for risk transfer operation under each scenario, and
optionally implementing the optimal mode for a chosen scenario in an automated fashion.
5 . The method of claim 4 wherein an optimal mode for risk transfer operation is a mode that maximizes risk transfer operation value while satisfying risk transfer operation regulatory requirements.
6 . The method of claim 4 wherein an optimal mode for risk transfer operation is a mode that maximizes customer value while satisfying risk transfer operation regulatory requirements.
7 . The method of claim 4 wherein implementing an optimal mode for the risk transfer operation includes taking actions selected from the group consisting of changing one or more contingent capital contracts, purchasing one or more contingent capital contracts, changing a duration for one or more investments, changing an investment mix, adding one or more risk transfer products, changing one or more risk transfer product specification, changing one or more risk transfer product prices, changing one or more reserve levels, completing a plurality of customer risk transfer transactions and combinations thereof.
8 . A computer readable medium having sequences of instructions stored therein, which when executed cause the processor in a computer to perform a risk method, comprising:
aggregating data from a plurality of management systems for a commercial enterprise, developing a model of enterprise financial performance by segment of value using said data; and
quantifying a plurality of risks that have an impact on the financial performance of said enterprise using said model
where the segments of value are selected from the group consisting of current operation, real option, derivative, investment, market sentiment and combinations thereof.
9 . The computer readable medium of claim 8 wherein the method further comprises:
completing a series of tasks related to a plurality of quantified risks for an enterprise wherein said tasks are selected from the group consisting of identifying an optimal set of risk transfer transactions for the enterprise, identifying an optimal mode for operating one or more risk management control programs for the enterprise, completing an optimal set of risk transfer transactions for the enterprise, reporting said enterprise risks and combinations thereof
10 . The computer readable medium of claim 8 wherein a plurality of risks further comprise event risks and risks selected from the group consisting of contingent liabilities, strategic risks, variability risks, volatility and combinations thereof.
11 . The computer readable medium of claim 8 wherein identifying an optimal set of risk transfer transactions further comprise identifying a set of transactions selected from the group consisting of insurance policy transactions, swap transactions, derivative transactions, contingent capital transactions and combinations thereof.
12 . The computer readable medium of claim 8 wherein quantifying a plurality of risks further comprises developing a plurality of scenarios selected from the group consisting of normal, extreme, regulatory and combinations thereof for a commercial enterprise financial performance and simulating the performance of the commercial enterprise by segment of value under each scenario as required to measure the impact of each risk from the plurality of risks.
13 . The computer readable medium of claim 8 wherein developing a model of enterprise financial performance by segment of value further comprises developing a model of the impact of one or more elements of value and a plurality of external factors on an enterprise financial performance by segment of value where a plurality of external factors are selected from a group consisting of the ratio of actual earnings to expected earnings, a commodity price, an inflation rate, a gross national product (gnp) growth rate, a market volatility measure, volatility vs. industry average volatility, an interest rate, an interest rate change, an insider trading direction, an insider trading level, a consumer confidence level an unemployment rate and combinations thereof.
14 . The computer readable medium of claim 8 , wherein the method further comprises:
obtaining a set of measured risks for a plurality of customers, a set of regulatory requirements and a plurality of performance data for a risk transfer operation,
generating a plurality of scenarios for a risk transfer operation performance using the performance data, regulatory requirements and customer risk data;
identifying and displaying an optimal mode for risk transfer operation under each scenario, and
optionally implementing the optimal mode for a chosen scenario in an automated fashion.
15 . A risk system, comprising:
networked computers each with a processor having circuitry to execute instructions; a storage device available to each processor with sequences of instructions stored therein, which when executed cause the processors to:
aggregate data from a plurality of management systems for a plurality of commercial enterprise customers,
develop a model of enterprise financial performance by segment of value for each customer using said data;
quantify a plurality of risks that have an impact on the financial performance of each enterprise using said model
obtain a set of regulatory requirements and a plurality of performance data for a risk transfer operation,
generate a plurality of scenarios for a risk transfer operation performance using the performance data, regulatory requirements and quantified customer risk data; and
identify and display an optimal mode for risk transfer operation under each scenario.
16 . The system of claim 15 wherein an optimal mode for risk transfer operation is a mode that maximizes risk transfer operation value while satisfying risk transfer operation regulatory requirements.
17 . The system of claim 15 wherein an optimal mode for risk transfer operation is a mode that maximizes customer value while satisfying risk transfer operation regulatory requirements.
18 . The system of claim 15 wherein an optimal mode for risk transfer operation is implemented in an automated fashion by taking actions selected from the group consisting of changing one or more contingent capital contracts, purchasing one or more contingent capital contracts, changing a duration for one or more investments, changing an investment mix, adding one or more risk transfer products, changing one or more risk transfer product specification, changing one or more risk transfer product prices, changing one or more reserve levels, completing an optimal set of risk transfer transactions for each customer and combinations thereof.
19 . The system of claim 18 wherein an optimal set of risk transfer transactions for each customer further comprise a set of transactions selected from the group consisting of insurance policy transactions, swap transactions, derivative transactions, contingent capital transactions and combinations thereof that maximize a customer value within a constraint of available capital.
20 . A method for optimizing the operation of a risk transfer organization, comprising:
obtaining a plurality of data that define external market conditions, reserve requirements and financial performance for a plurality of customers for a risk transfer operation, and
identifying an optimal mode for risk transfer operation wherein the optimal mode for risk transfer operation specifies a set of actions selected from the group consisting of changing one or more contingent capital contracts, purchasing one or more contingent capital contracts, changing a duration for one or more investments, changing an investment mix, adding one or more risk transfer products, changing one or more risk transfer product specification, changing one or more risk transfer product prices, changing one or more reserve levels, completing an optimal set of risk transfer transactions for each customer and combinations thereof that will optimize risk transfer operation financial performance.