- Background
In recent years, a rapidly growing number of organizations have embraced enterprise risk management and instituted a dedicated program with extensive resources supporting it. The overall goal of enterprise risk management is to provide a framework for risk management, through the identification, assessment, monitoring, and response to risks impacting an organization.
A key risk that is considered under enterprise risk management frameworks is operational risk. Broadly defined, operational risk refers to the risk of losses that result from the deficiency or failure of internal processes, human capital, and systems, or from external events. Clearly, this risk can have both immediate and significant impact on almost any organization. With this in mind, the Canadian Institute of Actuaries, Casualty Actuarial Society, and Society of Actuaries' Joint Risk Management Research Team is interested in research that explores operational risk for insurers within an ERM framework.
- Research Objective
The CIA, CAS, and SOA's Joint Risk Management Research Team would like to initiate one or more research projects directly related to operational risk. Generally speaking, the team is seeking researchers to evaluate and gauge the impact of operational risk and how it can be managed under an enterprise risk management framework. The team is willing to consider any proposal that can demonstrate that the results will extend knowledge in operational risk and how it can be managed. As such, the scope of the research under this Request for Proposals has been deliberately left open to allow for sufficient latitude in the development of proposals from interested researchers.
The following is a sample list of potential topics that might be considered. However, the list of topics is only intended to provide examples and not restrict other potential issues or questions that may be pursued.
- What are the sources of process risk and how can they best be controlled?
- How does inadequate documentation for internal processes impact operational risk?
- What controls can be implemented to mitigate human capital risk?
- What types of modeling have been developed to minimize system risk, such as data integration issues? How effective have they been?
- What are planning techniques that can be used to screen for external events that may impact an organization?
- What lessons can be learned through the experience of other industries with operational risk that might be applied to the insurance industry?
- What are potential data sources that would be helpful to assess operational risk?
Proposals that either approach operational risk from a practical perspective or serve to extend theoretical development are both encouraged and welcome.
- Proposal
To facilitate the evaluation of proposals, the following information should be submitted:
- Resumes of the authors, including any graduate student(s) expected to participate, indicating how their background, education, and experience bear on their qualifications to undertake the research. If more than one author is involved for each report, a single individual should be designated as the lead researcher and primary contact. The person submitting the proposal must be authorized to speak on behalf of all the authors as well as for the firm or institution on whose behalf the proposal is submitted.
- An outline of the approach to be used. Details should be given regarding the manner in which appropriate published material will be identified and evaluated, search techniques to be used, collateral material to be consulted, and possible limitations of the review and analysis.
- Cost estimates for the research, including computer time, salaries, report preparation, research costs, etc. Such estimates can be in the form of hourly rates, but in such cases, time estimates should also be included. Any guarantees as to total cost should be given and will be considered in the evaluation of the proposal. While cost will be a factor in the evaluation of the proposal, it will not necessarily be the decisive factor.
- A schedule for completion of the research, identifying key dates or time frames for research completion and report submission.
- Other related factors that give evidence of a proposer's capabilities to perform in a superior fashion should be detailed.
- Selection Process
The CIA, CAS, and SOA's Joint Risk Management Research Team is responsible for the selection of the proposal to be funded. Input from other knowledgeable individuals may also be sought, but the CIA, CAS, and SOA's Joint Risk Management Research Team will make the final decision. The SOA's Research Actuary will provide staff actuarial support. A Project Oversight Group (POG) will be appointed to oversee the project upon selection of the proposal.
- Questions
Any questions regarding this RFP should be directed by fax, or e–mail to: Steven Siegel, SOA Research Actuary (ph: 847.706.3578, f: 847.273.8578).
- Notification of Intention to Submit Proposal
If you intend to submit a proposal, please e-mail written notification by December 1, 2008 to: Barbara Scott, Society of Actuaries, 475 N. Martingale Road, Suite 600, Schaumburg, IL 60173-2226 or (ph: 847.706.3592, f: 847.273.3592).
- Submission of Proposal
Please e–mail a copy of the proposal to: Barbara Scott.
Proposals must be received no later than December 15, 2008. It is anticipated that all authors who have submitted proposals will be informed of the status of their proposal no later than January 15th, 2008.
Note: Proposals are considered confidential and proprietary.
- Conditions
The SOA reserves the right to not award a contract for this research. Reasons for not awarding a contract could include, but are not limited to, a lack of acceptable proposals or a finding that insufficient funds are available. The SOA also reserves the right to redirect the project as is deemed advisable.
The SOA intends to copyright and publish the results of this research. The research will be considered work–for–hire and all rights thereto belong to the SOA. However, appropriate credit will be given to the researcher(s).