Description: This article argues that using Economic Capital as a metric does not capture all of the risks. The author suggests an alternative that better meets a corporation's overall risk management needs. This is value-based ERM, which is an approach that makes the quantification of enterprise value central to all aspects of the ERM process. It is a combination of two techniques—enterprise risk management and value-based management, and it captures all of the risks in a single metric.

Description: The cyber insurance market looks like it’s growing—rapidly, in fact. However, there’s more to the cyber insurance market than the outward appearance of strong growth. Worldwide aggregate premium’s upward trend may even be cause for alarm. The increase in premium against a flat rate of insured exposure is a key sign that the market could turn from growth to constriction if a solution isn’t found in the near future. If the cyber insurance sector hopes to reach such lofty goals as exceeding $30 billion in global premium by 2028, it’s going to need more capital. Whether directly into the insurance sector or via support from reinsurance and retrocession, fresh capital should help insurers achieve greater market penetration, build a broader foundation for ongoing expansion, and chart a course for long-term sustainable profitable growth. The same sources capital insurers have used since the early days of the market won’t be enough, though. Thankfully, the insurance linked securities (ILS) market seems poised to help, particularly with several promising recent transactions. New sources of capital could bolster the foundation for future cyber re/insurance growth.

Description: This article highlights the significant steps being taken by the UK actuarial profession to establish a more focused role in risk management.

Description: Introduces the concept of total risk analysis, a methodology used to answer questions like "what are the chances we will lose more than $1 million"

Description: Latest in our on-going series in which we have a candid discussion with one the insurance industry's most respected and high profile risk practitioners

Description: Since most cash flows being discounted in the value calculation are dependent on the forward rates, in the key-rate calculation forwards (not spots) should be shifted. I will show that if spots are shifted up/down, they would not necessarily result in forwards being up/down for all the years in the particular key rate, resulting in unexpected results. I will further show how metrics calculated by shifting forwards versus spots enhance the accuracy of the approximation of projected value in various rate environments.

Description: Strategic Risk Management was given lower priority in a recent survey of ERM Objectives. This article tells how the author believes that recent events have caused many to shift to a more short term focus and in the future there will be a shift back to a priority for the longer term view that stands behind Strategic Risk Management when the environment settles down and things again seem to be more predictable.

Description: Duration matching is a risk management strategy, commonly used in the insurance industry, where the duration (price sensitivity to a yield curve movement) of an asset portfolio is adjusted to be made equal to the duration of the liability. However, this approach has flaws. In this essay, I note some key failures of duration matching and offer a potential alternative.

Description: In this article, the author describes the skills needed for the Chief Risk Officer and he offers why actuaries may, or may not, be best suited to fill the role.

Description: Read about Recent Publications in Risk Management.