Yuriy Krvavych (PricewaterhouseCoopers LLP, London)
Since ancient times, insurance has been playing an important societal role of hedging away uncertainty associated with ‘insurable risk’. Without it many socio-economic activities would be deemed too risky and impossible to undertake. Those receiving insurance cover (insureds) rely solely on insurer’s ability to honour insurance claims when they occur. On the other hand, whilst satisfying minimum solvency requirements imposed by regulators over a one year period to protect policyholders and maintain stability of the insurance market, insurers also have natural incentives to strategise their risk taking and apply active risk management over a time horizon well beyond one year to ensure their business is sustainable in the long run and such that adds value to investors (shareholders) that provide vital paid-in capital.
These additional risk management incentives are mainly due to the following differences between insurance entities and conventional financial organisations:
This talk covers the following selected topics of Enterprise Risk Management (ERM) in insurance and discusses how insurers could efficiently use their ERM tools, internal models and related processes to navigate towards the optimal use of capital resources and enhanced shareholders value: