Description: Competition for space in distribution channels has resulted in a proliferation of exotic options embedded in variable annuity products. This article discusses how this has created a need which can be addressed, in part, by hedging variable annuity guarantees with long-dated equity derivatives.

Description: Increased attention was paid to regulatory capital with the global financial crisis in 2008. Whilst companies may not have the incentives to retain a large amount of capital in the absence of regulatory capital requirements, overcapitalized entities can have drawback such as its impact on competitiveness. There are other weaknesses in the regulatory capital model such as its limitation in facilitating risk-based decisions as regulatory capital does not necessarily reflect the economic reality and risks an entity faces. Nonetheless, there are ways for regulators and/or companies to handle the weaknesses in the regulatory capital model. For instance, granularity can be introduced in determining regulatory capital. Economic capital can be used to encourage entities to implement risk management controls and facilitate risk-based business decisions (e.g., risk-adjusted performance assessment and risk-based capital allocation). Ultimately, hav ing effective risk management and risk-based capital determination are ways to prevent company failures and bankruptcies.

Description: This article highlights 13 attributes shared by various groups of companies that landed in trouble. The companies are identified, and the attributes are described.

Description: The article is based on a study of causes of insolvency and decisions made by management, regulators, and policyholders over the life cycle of the insolvency.

Description: There are two major categories of risks that are unique in international business- currency exchange rate risk and country risk. Currency exchange rate risk includes transaction exposure, translation exposure, and economic exposure. Country risk contains political risk and economic risk. There are a few different methods to hedge currency exchange rate risk and country risk also discussed in the article. Before you decide to invest in a certain country’s market, ensure you understand the currency exchange rate and political risks associated with the investment by performing due diligence on the country’s economic, political and cultural condition.

Description: An overview of the articles in the August 2012 issue of Risk Management and a list of winners of the most recent call for papers, “Risk Metrics for Decision Making and ORSA.”

Description: This article addresses the concern that while risk assessment models are supposed to help identify and reduce risk, they can be a source of risk themselves. A new report released by the Canadian Institute of Actuaries in August 2008 helps address that potential problem by providing useful guidance to actuaries who are charged with designing, implementing and using advanced models.

Description: Insurance companies are not immune to liquidity risks.

Description: This report reviews the academic literature on risk aggregation and diversification as well as the regulatory approaches. We will point out the advantages and disadvantages of the different approaches with a focus on model risk issues.

Description: Is Risk/Return a sound tool for decision-making? No. It is not consistent, not objective, distorts decision and degrades governance. Why? What shall we do then?