The Own Risk and Solvency Assessment (ORSA) framework has become the de-facto language of forward-looking risk supervision. Below is a practitioner's guide drawn from three Nigerian implementations.
Phase 1 — Setting the risk-appetite spine
Begin with the Board. The ORSA process must hang off an explicit risk-appetite statement — and the Board, not management, owns it.
Phase 2 — Wiring the data pipeline
The most common failure mode is data-quality: stale exposure tables, missing collateral records, inconsistent treatment of off-balance-sheet positions. Spend disproportionate effort on the pipeline before running scenarios.
Phase 3 — Stress scenarios that matter
A good scenario answers a question the Board is already worried about. A bad scenario is a textbook exercise. Always pair quantitative scenarios with one narrative scenario that explains the chain of events.
Phase 4 — Closing the loop
Findings must end up changing decisions. If the ORSA produces a report nobody acts on, the framework has failed. Build in explicit Council review milestones so ORSA findings have to be addressed.
Closing thought
ORSA is most powerful when it surfaces the risks the Board does not yet want to discuss. Risk officers should run toward those conversations, not away from them.
By Adamu Yusuf, FCRM. The views expressed are the author's own and do not necessarily reflect the official position of the CRMI Governing Council.
