At RsRL, we believe that quantification is key for sustainability of risk management and resilience of an entity. Thus, demand of quantification and model validation has a high relevance for business practitioners, even more so for financial services companies, as they are most dependent on quantification and models. New regulations force us to use models (some are more simple like the solvency template) for the company`s balance sheet. Are these numbers good enough for us to make decisions based on them? What about other models we already use, say in pricing, reserving, business planning, etc.? Do we intentionally neglect areas, which are hard to model (Nat-CAT, Operational) in favor of areas with lots of data (mortality, (public) equity, etc.)?

In order to calculate the risk involved, we use models. We know that the world is too complex to be translated in a couple of equations and formulas. The models should reflect the essentials and should be internally free of contradictions. In a credit business the models should reflect that debtors are all subject to the same macro-economic influences. So, there is an essential need since sub-prime crisis (2008) that all models need to be validated independently. We can understand and accept that for pricing we need other models than for capital requirement

calculations. Well renowned Mathematician Delbaen (Artzner, Eber, Heath) addressed these issues in 1999, when they started to study risk measures from an axiomatic viewpoint. The key message was that we should use more models (in mathematical language, we should use more probability laws and should use methods described as robust methods) to be integrated in our regulatory systems across locations. And we follow these principles at RsRL.

Quantitative Risk Management (QRM) is broadly defined as the discipline, which aims at quantifying the impact of known risks based on available, objective information. We use the momentum in the region created by more risk-based-regulation to explore the current practices of ERM critically and discuss practical next moves for improvement. We believe that the best Mangers in financial industry are not necessarily quants, but must know benefits and limits of quantitative methods, which are necessary to navigate the tough and competitive markets, globally and certainly in the region.

As a region and a market-place, we strive to attain the highest standards of Corporate Governance to match or surpass international best practice. As responsible members of the business community, we have a responsibility to stakeholders within our businesses i.e. shareholders, management, customers, suppliers, financiers, government and the public. We cannot rely on external parties e.g. regulators, lawmakers etc. to ensure we are not putting our stakeholder’s interests under excessive risk.