Enterprise Risk Management for Health Entities Discussion Forum Definitions and Framework • How does ERM differ from “business management” in sense we have previously used it ? the • How does ERM differ from “strategic planning” ? • How does the role of the health actuary fit into ERM ? • Who are the other professionals in a firm that are part of an ERM process? • Can the ERM process be tailored to fit health insurance needs and functionality? • How many firms have a CRO or Risk Management Team? • What are the barriers to implementing an ERM process? • Do you feel qualified to be a CRO? Why or why not? • How does ERM “look” for a health care provider vs. a payor?Slide 2 Potential Discussion Points – Round Table Session Unique Health Entity Characteristics • Time Horizon • Unique Risk Factors – – – – – – Trend Uncertainty Provider Contracting and Access Rate Increases / Morbidity / Lapsation Risk Concentrations Government Intervention Enrollment Growth and Decline • Impact of Investments – ALM Impact – Matching Risk? – Liquidity Risk – Cash Flow Testing (NAIC filing – Section 7 & 8) • Unique Capital Expenditures – Systems - mandated or strategic – Network, Operational, and product development • Others??? Potential Discussion Points – Round Table Session Slide 3 Practice – Assessment of Processes • Any use of Stochastic or Dynamic Modeling? – What is planning/forecast process ? – Is there a point of “diminishing returns” for modeling ? • Involvement of Actuaries in risk assessment? – – – – – – – Environmental Financial Operational Pricing Market or Reputational Strategic Others? • How do risks get identified or categorized? – What risks go unmodeled and why? Potential Discussion Points – Round Table Session Slide 4 Practice – Assessment of Planning • Categorize the Budget Process – – – – How are Tactical and Strategic budgeting/planning linked? What risks are included in the budget/planning process? How is Capital Budget integrated into Budget and Planning? How are Actual/Expected and Recast outcomes handled? • How are companies’ risk tolerance measured? – Profit outcomes? – New Ventures? – Quantification • How does provision for adverse deviation fit the into planning process? • What are surplus targets and how are they established? Potential Discussion Points – Round Table Session Slide 5 Practice – Employer Viewpoint • Has the modeling of behavioral characteristics been researched? – Data mining of information from various employer files related to health care, worker’s comp, short-term disability, etc. • How are employers managing their risk of increasing health care costs? Potential Discussion Points – Round Table Session Slide 6