The Own Risk and Solvency Assessment, commonly referred to as ORSA, is a fundamental part of the Solvency II regulatory regime for insurance companies. It is a continuous internal process through which an insurer assesses the adequacy of its risk management and the sufficiency of its solvency position in light of its specific risk profile, strategic plans, and business environment. Unlike the standard capital requirements that apply broadly across the industry, the ORSA is tailored to each insurer’s own risks and business strategy.
Own Risk and Solvency Assessment requires insurers to take a forward-looking view of their risks and solvency needs, typically over a multi-year planning horizon. This includes not just current capital adequacy but also how future risks—such as economic downturns, emerging liabilities, or changes in business models—might impact the firm’s financial stability. Insurers must document the ORSA process and report it to their board of directors and supervisory authorities, ensuring that senior management is actively engaged in understanding and overseeing the company’s risk exposure.
The assessment is not just about regulatory compliance; it is intended to embed risk culture into the core of decision-making processes. It helps firms align their capital management, risk appetite, and strategy in a way that strengthens resilience and sustainability. Because the ORSA is meant to reflect the insurer’s unique perspective on its risks, the methods, frequency, and level of detail can vary, but it must always be proportionate to the nature, scale, and complexity of the business.