Raymond Cheung
Chartered Actuary · CRO · Board Adviser · Singapore
The Own Risk and Solvency Assessment is one of the most governance-valuable documents an insurance organisation produces — and one of the most underused at board level. Here is how to change that.
Every MAS-regulated insurer in Singapore produces an Own Risk and Solvency Assessment. The ORSA is one of the most actuarially intensive documents the organisation creates — it stress-tests the capital position against a range of scenarios, quantifies the resilience of the business to adverse developments, and connects the risk profile to the capital strategy. It should be one of the most strategically useful documents the board reviews.
In most organisations it is not. What typically reaches the board is a summary that confirms the organisation is within its capital requirements, presents the key assumptions at a high level, and reassures directors that the regulatory deliverable has been met. The stress test results — the scenarios that reveal where the capital position is under genuine pressure — often do not make it to the board in a form that directors can engage with.
What the ORSA should be telling the board
The value of the ORSA is not in the compliance conclusion. It is in the stress test analysis — what happens to the capital position in the scenarios the business is most exposed to, and what those results imply for strategic decisions the board is being asked to make.
- If the pandemic scenario shows a capital deficit within twelve months, what does that mean for the dividend proposal currently on the board agenda?
- If the climate transition scenario reveals significant liability reserve pressure, does the reinsurance programme adequately protect the capital position?
- If the interest rate stress shows the investment portfolio deteriorating in a way that impairs the solvency margin, what does that imply for the asset allocation review?
- What is the capital cost of the strategic plan, and is the ORSA showing that the organisation has sufficient capital to fund it through the scenario range?
“The ORSA is produced for MAS. But its real audience should be the board — the people making the strategic decisions the stress tests are designed to inform.”
How to use the ORSA as a board
The boards I have worked with that use the ORSA most effectively do three things differently. They engage with the stress test scenarios rather than just the base case results — asking which scenarios are most relevant to the current strategic decisions and what the results imply for those decisions. They connect the ORSA outputs explicitly to capital allocation proposals — requiring management to show the capital cost of proposed investments and growth plans in ORSA terms. And they treat the ORSA as a live document — using it as the reference point for capital discussions throughout the year, not just the moment of regulatory submission.
If your board is receiving an ORSA summary that does not enable any of those conversations, it is worth asking for a different format. The technical team can produce it. They often need to be asked.
Common Questions
What is an ORSA and why does it matter for Singapore insurance boards?
The Own Risk and Solvency Assessment (ORSA) is a regulatory requirement for MAS-licensed insurers. It stress-tests the capital position against adverse scenarios and connects the risk profile to the capital strategy. For boards, it is the primary tool for understanding whether the organisation's capital is adequate for its strategic ambitions and its risk exposure.
How should a Singapore insurance board use the ORSA?
The board should engage with the stress test scenarios — not just the base case compliance conclusion — and connect ORSA outputs to strategic decisions including dividend proposals, growth plans, reinsurance structure, and asset allocation. The ORSA's value is as a strategic governance tool, not only a regulatory deliverable.
About the author
Raymond Cheung is a Chartered Actuary, C-suite executive and board adviser with more than 20 years of experience across Asia in risk management, insurance, ESG and corporate governance. He is the CEO of CER Consultancy and an accredited trainer at SMU Academy and the Singapore College of Insurance.