Description: This article is the final installment of our three-part series on economic scenario generators (“ESGs”). Part I and II were published in the November 2019 and August 2020 issues of The Modeling Platform. Part III contextualizes the framework for selecting, building, and validating ESGs and focuses on the Academy Interest Rate Generator (“AIRG”), the most commonly used real-world ESG for US actuaries

Description: This article is the first installment of a three-part series that aims to provide an overview of ESGs and will focus on the general motivation for stochastic modeling, its advantages and its limitations. Future articles will further break down the key factors of ESGs and the application of these factors to better understand the Academy Interest Rate Generator (AIRG).

Description: Performance metrics are widely used by companies to create benchmarks, assess performance, and make strategic decisions. Traditional metrics, however, may not properly capture the risks embedded in complex or illiquid insurance liabilities, as recent global market volatility has revealed. As a result, executives are increasingly turning to risk-adjusted performance metrics (RAPMs) to enhance performance measurement. This article describes the shortcomings of traditional performance metrics and introduces some of the more commonly used RAPMs.