Bringing All the Strands Together

René Doff

Risk management is at the core of the insurance industry. This has been the case since its foundations, and will continue to be so long into the future. However, we saw the explicit focus on risk management increase during the first decade of the 21st Century, with new methodologies for measuring risks being developed – which has also given way to new risk management tools to actively manage risks and alter an insurance company's risk profile. In addition, the financial crisis and the advances in Solvency II have created a momentum for insurance companies to address risks.

This book has described the seven major risk types and the respective ways to manage and measure them. In the context of underwriting risk, cashflow projections are key to determining the value of an insurance portfolio and performing simulations. In life, the embedded-value tools are the most logical way to derive cashflows, whereas in non-life loss triangles are being used. In both cases, cashflows are used to apply simulations based on the underlying risk profile. While the tools may differ, the methodology underlying the valuation of the liabilities and the risk models is identical. This may be