Description: In this article, the author discusses the new IAA strategic plan for dealing with global financial risk.

Description: An insurance company selling LTCI today would do far better to address some important financial needs by taking the aspirin of improving modeling and pricing, and not the morphine of shutting down the business line entirely. The aspirin can consist of two strategies: First, integrate the projections of the asset portfolio and the claims liabilities when testing the sensitivity of assumptions or stochastically modeling the product. Second, establish a separate asset portfolio for LTCI products, and make sure it has a strong, well-defined, well-documented Investment Policy Statement. An Investment Policy Statement will enable pricing actuaries and investment departments to work together with the same goals and objectives.

Description: The impetus for this paper is a concern that a unification of pricing, valuation, and management-basis financials may be essential to ensure the viability of life insurance companies in the variable economic environment of the foreseeable future, which will have serious effects on interest-sensitive products. The paper offers hypotheses on which any unification should be based. The proposed unification is structured on an equity capital management approach and on a variation of the level-return-on-equity accounting method. Discussions of this paper are included.

Description: This case study is intended to educate insurance professionals on historical insurer impairments and insolvencies and possible future prevention indicators.

Description: Individuals face many risks during different phases of their financial life cycle. These risks in turn have major financial implications on their wealth creation, wealth preservation and wealth distribution aspirations. Traditionally risk taking is viewed negatively in relation to the personal financial-planning domain. In fact, most of the studies linking risk management to personal financial-planning focus primarily on investment and insurance related risks. In contrast, enterprise risk management (ERM) takes a portfolio view of risks right from the personal level to the organization level. The existing literature on ERM is seen as an essential feature of corporate world and there is not much literature available that explicitly addresses the issue of aligning ERM framework to the whole spectrum of personal financial planning. In this backdrop, it seems logical to develop an in-depth study on aligning an ERM framework to a personal-financial planning domain. Accordingly, this conceptual paper, avoiding mathematical jargon, extensively examines the extent to which ERM can be aligned to the personal-financial planning domain. The Study concludes by suggesting how individuals should identify, aggregate, evaluate and address risks across the whole spectrum of personal financial planning domain

Description: This article re-caps the Investment Actuary Symposium held on November 8-9, 2001 in Las Vegas, Nevada.

Description: Feature article discussing Nassim Taleb’s black swan theory. Taleb points out that banks keep their loans at full value - anchored to the book value of the loan. The solution to the problem is to use mark-to-market reporting and have volatility instead of having no volatility and then experiencing a Black Swan event.

Description: The traditional informal care of/by family has faced increasing geographic and economic challenges from changing family households and sources of family income. Financial planning and risk protection tools provide important resource in the changing retirement landscape toward optimal family support and crisis management, that is, with less duress and financial burden to affected family caregivers. Ultimately, maintaining family values and close communications through evolving family structures are key to a healthy society and economic welfare of the people.

Description: Scenario analysis and stress tests based on consideration of shock events and their possible repercussions can provide useful information to management and regulators on a company’s resiliency through a chain of events, as well as support the consideration of a firm’s operations as an integral part of a wider financial system. We discuss how scenario analysis and stress testing can be used to define a company’s risk appetite, which is at the core of a well-embedded ERM framework. Presented at 2010 Enterprise Risk Management Symposium, Society of Actuaries, April 12-15, 2010.

Description: Many top-performing businesses aren’t just risk aware, but rather risk intelligent. Such a posture helps prepare companies for a major event and can demonstrate to a regulator or auditor that an appropriately strong control framework is in place. Better still, companies gain real strategic value from a “risk adjusted” understanding not only of their threats and vulnerabilities, but also the upside opportunities associated with various risks. It starts with having both qualitative and quantitative information to identify, assess and manage risks. Strategic risk management, at its core, is about creating value by increasing transparency and accountability, and quality of information. More than a mere compliance exercise, effective risk management enables more informed strategic decision making, increased accountability and transparency, a greater likelihood of organizational success, and – ultimately – competitive advantage, as borne out by many studies that correlate risk management and financial results.