Description: Within this paper, we take an applied approach to examine the economics of ERM. We provide readers with a series of economically based warning signs that might signify significant changes in asset prices. These warning signs are based on the economic concepts of elasticity of demand, elasticity of supply and herd behavior. Our recommendations provide practical guidance to directors, executives and practitioners regarding ways in which they can mitigate risks in today’s volatile environment. Presented at 2010 Enterprise Risk Management Symposium, Society of Actuaries, April 12-15, 2010.

Description: Many risk management decisions involve the timing of implementing risk strategies. The cost of hedging, capital raising and securitization changes with the economic environment. The timing of de-risking and investment in new risk management functions affect the cost and benefit of these projects as well. Like investment timing, it is important to consider the timing in risk management decisions to maximize the gain of risk management projects. This paper discusses methods of determining the appropriate timing of implementing a risk management strategy or investing in risk management projects. It explains the human biases that may lead to inferior timing decisions. It also covers the costs and benefits of risk management projects and the impact of new information on the decision-making process. Timing considerations for financial risk hedging, insurance risk hedging and investment in new risk management projects are explained. Factors used for timing decisions include economic conditions, market volatility, credit rating, borrowing cost, capital adequacy and financial resources.

Description: Book Review of "Cheating Death, the Promise and the Future Impact of Trying to Live Forever", by Marvin Cetron and Owen Davies.

Description: It is obvious that the introduction of a deductible has two major effects. The amount paid for every claim will drop, resulting in a lower claim burden for the insurance company. There will also be a drop in claim frequency, leading to a decrease in claim handling expenses. However, it is by no means obvious how the average claim size changes with the introduction of a deductible. In this paper, we will study this question. First, we derive some theoretical results then apply them to concrete distributions.

Description: A collection of essays aimed to gather perspectives, opinions and data on how to advance the state of effective retirement planning to assist individuals, actuaries, financial advisors, employers, and other stakeholders. The goal was to explore ideas and thoughts on identifying current and alternative means of achieving and measuring retirement income adequacy.

Description: The two-parameter Pareto distribution is a commonly used model in reliability and risk modeling. Minimum variance unbiased estimates of the parameters of Pareto distribution are not known. In this paper, we propose and investigate a method of estimation of the parameters of the Pareto distribution. This method is based on minimization of the Kolmogorov-Smirnov distance between the empirical cumulative distribution function [cdf] and the cdf of the Pareto distribution.

Description: Many risk management decisions involve the timing of implementing risk strategies. The cost of hedging, capital raising and securitization changes with the economic environment. The timing of de-risking and investment in new risk management functions affect the cost and benefit of these projects as well. Like investment timing, it is important to consider the timing in risk management decisions to maximize the gain of risk management projects. This paper discusses methods of determining the appropriate timing of implementing a risk management strategy or investing in risk management projects. It explains the human biases that may lead to inferior timing decisions. It also covers the costs and benefits of risk management projects and the impact of new information on the decision-making process. Timing considerations for financial risk hedging, insurance risk hedging and investment in new risk management projects are explained. Factors used for timing decisions include economic conditions, market volatility, credit rating, borrowing cost, capital adequacy and financial resources.

Description: Graphs mortality experience over the prior 15 years, show possible trends over the prior 80 years, discusses the impact on liabilities and funding of the New York public retirement system based on projections of life expectancy, and discusses the possible factors that have affected mortality.

Description: People naturally observe risk in the form of the range of experienced gains and losses which is usually represented in statistical terms by standard deviation. In most cases, there are not enough observed values to reliably discern the true amount of losses that are possible in extreme situations. Statistical techniques that have long been applied to insurance company risks are being used to extrapolate from observed risk to extreme tails of the distribution of gains and losses. These processes are essentially an extrapolation from the “known” risk of volatility near the mean to “unknown” risk of extreme losses. “Fat tails” is a term often applied to risks where the likely losses in rare situations significantly exceeds the predictions of a Gaussian (“thin tailed”) distribution. This paper will look at the relationship between the observed risk and the extreme risk in statistical insurance r isk models and discuss how we might create a discussion among model users about the appropriateness of that relationship for specific types of risks.

Description: Overview of the papers presented at the Retirement Implications of Demographic and Family Change Symposium