The Commissioner for Insurance, Mr. Fola Daniel, has said NAICOM will commence enforcement of the risk management framework for the industry in July.

He said this during the awareness workshop on guidelines for risk management framework for chief executive officers of the insurance companies in Lagos.

Daniel said, “Implementation of the risk management framework, which will commence in July will require experienced and knowledgeable supervisors to exercise subjective judgement on continous basis. This means that the staff of the commission must quickly build relevance capacity.”

The NAICOM boss pointed out that the role of the commission was to promote the maintenance of efficient, fair, safe and stable insurance market for the benefits and protection of policyholders.

According to him, an effective regulatory authority is able to require an insurer to take timely preventive and corrective measures if the insurer fails to operate in a manner that is consistent with sound business practices or regulatory requirements.

Given the role of effective, firm wide risk management in maintaining strong financial institutions, he said that it was apparent that the commission must redouble its efforts at helping organisations improve their risk management practices.

Accordingly, he noted that the commission had increased supervision with regards to this issue. For this reason, he added that through its migration to risk-based supervision, it would focus on institutions in most need of improvement, while it would continue to remind the stronger financial institutions of the need to remain vigilant, particularly in the light of ongoing fragility of market conditions.

He said, “We have released this guideline regarding various aspects of risk management, including further emphasis on the need for an enterprise wide perspective when assessing risk. Much of our work is being conducted in close consultation with supervisors in other countries.”

The commissioner observed that effective oversight of an organisation as a whole was one of the most fundamental requirements of prudent risk management.

For this reason, he said that top management at successful companies were actively involved in risk management, which includes determining the firm’s overall risk preference and creating the incentives and controls to induce employees to abide by those preferences.

Source: Punch/Nike Popoola