Description: The impact of Fed’s QE program on the financial markets has been enormous and profound. The tapering and the eventual removal of the stimulus will be equally enormous and profound, and may be disruptive. To adapt to the potential regime change in near future, some investment strategies have been proposed: (1) shorten duration to focus on the short end of the yield curve and create laddered portfolios; (2) reduce allocation to high yield bonds; (3) rotate out interest rate sensitive sectors such as utilities; and (4) use interest rate derivatives to hedge the interest rate uncertainties lying ahead. On the other hand, contrarians who see the QE program continuing may stay the course and consider (1) adding duration, (2) gaining exposure to high yield bonds, and (3) increasing allocation to utilities and telecoms.

Description: The standard for measuring retirement income adequacy has been the final earnings replacement rate (usually targeted at 70%). But - does it work?

Description: Feature article that discusses the importance of developing a risk tolerance statement.

Description: Hear from the editor’s on the December 2018 issue of Risk Management published by the JRMS.

Description: Other articles that will be of interest to readers.

Description: The five words for ERM are transparency, discipline, alignment, adaptability and resilience. This article focuses on transparency, discipline and resilience.

Description: This paper introduces a single measure combining cost and quality of healthcare. This is used to demonstrate the magnitude of the challenge of the increasing dependency rate. It is then used in assessing a number of alternative financing models, including user fees and alternative compensation methods for physicians. The paper documents implementation issues and evaluates the desirability of implementing these approaches in Canada.

Description: This article gives an overview of the types of chronic illness acceleration riders that are now becoming prevalent in the US life insurance marketplace. The article discusses features that risk control measures that one may wish to consider when designing such an accleration rider.

Description: Credit ratings have played an essential role in the financial system and have been used extensively by market participants. Despite their wide use in the financial services industry, they are actually insufficient for pricing and risk management of fixed income securities.