Emphasis 2009/3

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How can we improve our understanding of the probability and severity of financial bubbles or extreme risk events? Enterprise risk management has enhanced our awareness of the range of risks we face and ways to measure them. Economic capital measures of capital requirements, MCEV measures of financial performance, integrating reinsurance in capital structuring, measures of credit crisis insurance claims, accounting for risk costs and market risks in pricing, and the application of VaR, TVaR and scenario analysis, all contribute to a better understanding of risk and reward. Some would add fractal analysis to further aid understanding of financial market behavior, in addition to generating the colorful image shown here.

Enterprise Risk Management

• Aggregating Enterprise Risk

  By Brian Heale, Mark J. Scanlon and François Morin

  Embedding ERM in the business decision-making process requires aggregation of the full range of enterprise risks through a timely, accurate and consistent economic capital measurement system.

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  Property & Casualty Insurance

• Insured Loss Exposure to the Credit Crisis

  By Christopher Bozman and Michael Christian

  To update projections of insured losses from the credit crisis, there is a growing need for nontraditional actuarial models to estimate liabilities as well as losses related to future contagion events.

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• Predictive Modeling Advances

  By Klayton N. Southwood and Brian M. Stoll

  Predictive modeling is rapidly extending from personal to commercial lines, and from pricing and underwriting to management of catastrophes, reinsurance, marketing and claims.

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Financial Services

• Easy Access to the European Insurance Market

  By Ulrich Wiesenewsky and Martin Baier

  More and more insurance companies are taking advantage of special locations in Europe to explore the market for cross-border sales.

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• Managing Extraordinary Risk

  By Mike Lombardi, Michael Griffiths and Andrew F. Giffin

  The economic crisis and other recent events highlight the need to manage extraordinary risk associated with assets, liabilities and capital. A combination of valuation models, statistical risk measures and stress testing can help to better manage the unknown.

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• Risk Capital Solutions

  By James W. B. Hole, Joe Lebens, Paul LeStourgeon and Thomas S. McIntyre

  The current economic crisis illustrates the need for a better understanding of risk and improved capital management. This requires a broader view of capital that includes reinsurance as a form of capital, integrated ERM and EC modeling, and efficient capital strategies.

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Life Insurance

• Implications of the Financial Crisis for MCEV

  By Kamran Foroughi

  Companies should address the challenges for MCEV raised by the financial crisis, to help improve external credibility and make better business decisions.

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The Last Word

• Emerging Risk for P&C Insurers: Inflation

  By Stephen Lowe

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