Battlecard #19 ORSA vs MCT

mimilau5858mimilau5858
edited August 2022 in OSFI.ORSA

  1. Could you further expand what you mean by ORSA admits assessment of internal controls and MCT does not? What would be examples of these internal controls that MCT is missing?

  2. What would be some examples of qualitative considerations that ORSA has that MCT (and maybe FCT) does not have?

Comments

  • Staff-T1Staff-T1

    1. The MCT is just a risk based formula to calculate the one-year capital requirement whereas ORSA is more of a long term view on the capital needs of a company to support its business plan. As such, there are more rigorous requirements needed in an ORSA which includes the assessment of internal controls. Internal controls would include making sure the data used it appropriate, all risks that are unique to the company are correctly identified, effectiveness of systems supporting ORSA, etc.

    2. Certain risks that are not in a solvency or going-concern scenario (FCT), long-term business plan and emergence of new risks from aforementioned business plan (MCT)

  • HateExams99HateExams99

    FCT forecast period is usually 3-5 years and the report is required annually; how about ORSA? Is its forecast period the same as FCT? I didn't see anywhere specifying a number.

  • Staff-T1Staff-T1

    ORSA is more principles based. There is no specific forecast period for it as it would vary based on each company's own view

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