Description: The adoption of FAS 158 forces sponsors of post-employment health benefit plans to consider how to manage the volatility that changes in medical care inflation create in the other postemployment benefits (OPEB) liability. By choosing carefully how the nominal discount rate used for the liability is decomposed into real rates and inflation, I illustrate that the true exposure to an OPEB plan is to the spread of medical care inflation above (or below) the overall inflation rate. The implication is that an effective immunization strategy exists that can eliminate most of the volatility in the OPEB account.

Description: This is a compilation or risk management terms garnered from a survey of risk professionals supplemented with analysis of firm-level information on significant risks as reported in 10-K financial statements. Results indicate the existence of significance differences in terminology. The dominating pattern observed is a dichotomy between internal and external perceptions. Also observed is a difference between terms used by actuarial professionals and traditional risk managers.

Description: The system of using securities exchanges and commodity futures contract exchanges is inadequate to the task. Neither can transfer the risks of derivative financial contracts to the capital markets. Regardless of the degree of regulation or the financial incentives, this system is insufficient. A new type of exchange is needed that copes with fast price changes – even from “long” to “short” – without inviting bankruptcy.

Description: Leading enterprise risk management ERM actuaries identified the top 11 areas of risk of 2011 and will provide monthly insight on how ERM programs can be used to hedge against those systemic risks. 'A realistic outlook on the probability of impending natural disasters and their associated risks will help businesses and individuals better prepare, helping to lessen the severity of impact on the global economy while also seizing opportunities to help those in need.' From the Bubble Risk Bulletin-June 2011.

Description: The article summarizes the SOA survey conducted of risk professionals regarding their understanding of important risk terms. The results contain perceptions by individuals and also firm-level information. Survey responses clearly demonstrated high differences in risk definitions.

Description: A focus on the capital markets perspective and some of the products dealers offer to hedge and help mitigate capital costs and tail exposure risks. From The Actuary Magazine, April/May 2005

Description: One important lesson learnt from the recent financial crisis was that overreliance on financial models could lead to unforeseen and harmful consequences. Model risk management (MRM) is becoming a core and mandatory component in enterprise risk management for many financial institutions, especially Fed/OCC CCAR-compliant firms. In recent years, insurance companies are also being required to have model risk management programs by Solvency II, ORSA and other supervisory guidance. MRM is not just model validation. It consists of governance and policies regarding a model's life cycle including data, model development, model test and implementation, model validation, model monitoring and documentation. It also provides guidelines and standards for risk assessment and model inventory management. The presenters will discuss current and best practice MRM, approach for model validation and auditing, as well as topics for technical issues such as types of model risks. It will also discuss the differences between Fed/OCC standards and Solvency II standards. At the conclusion of the session, attendees will be able to: Describe best practice in model risk management; Explain requirements and standards; and Develop model validation procedure.

Description: Mortality risk is the risk that a portfolio will suffer from mortality being heavier than expected. Longevity risk is the risk that a portfolio will suffer from mortality being lighter than expected. From Reinsurance Section News, November 2007, Issue No. 61.

Description: This Chairperson's Corner article discusses the SOA becoming the pre-eminent risk management profession. The Chairman's message is that actuaries have the inside track on risk management positions in the insurance industry and have a basis for competing for similar positions in the broader financial services industry.