What are the two levels of ORSA?

The two levels of Own Risk and Solvency Assessment (ORSA) are classified as foundation and advanced. The foundation level represents the basic elements and requirements necessary for an effective ORSA process. This foundational stage encompasses the essential practices that organizations must carry out to ensure they adequately understand their risk profile and solvency position.

The advanced level goes beyond the foundation to include more sophisticated analysis and integration of risk assessments within the organizational strategy. This stage demands a deeper engagement with the potential risks and a more nuanced understanding of how these risks affect the institution's solvency and business objectives.

This tiered approach allows firms to progressively enhance their risk management and solvency assessment capabilities, tailored to their specific complexities and operational environments. The advanced level not only builds upon the framework established at the foundation level but also incorporates advanced methodologies and practices for risk evaluation and capital adequacy assessments.