SAM is a bind, you think; SAM is resource-intensive; SAM is really a bit of a nuisance. What does the FSB hope to achieve through SAM? Five thoughts. Let’s count down.
#5. Better information. The FSB needs to manage risks, at company and industry level.
#4. Global recognition. South Africa, part of BRICS and the G20, needs other regulators to describe its standards as sufficiently up to scratch.
#3. Quality financial reporting. Since the FSB puts more energy into high-risk firms, the quality of the reporting goes a long way to setting those ‘risk grades’.
#2. Better risk management. Insurer the best way to help your regulator sleep better at night is to show to him that you’re the one lying awake, and that you understand your risks pretty well yourself.
#1. Deep attention. Most importantly, the FSB wants to see deep and uncompromising attention on the heart of the firm, and understands that nobody can do it better than the leaders of the firm itself.
SAM is built on the evidence that most failures come not from outside events but from poor management decisions and actions. It’s about how insurers think about their risks and how they respond to this.