Financial institutions are in the business of accepting risk from their clients and also managing risk exposure from within. Hence it is essential for financial institutions to have safe and sound risk management systems. In the banking world, Basel Accords were introduced while in the insurance sector solvency was introduced. The three major objectives that both regulations set out to achieve are to contribute to financial institutions in terms of regulatory costs, and to be based on measures and tools that are risk sensitive, i.e ones that are reflective of the risks faces by financial institutions.