If an insurer sets a premium based on the average probability of a loss in an entire population, those at higher-than-average risk for a certain hazard will benefit most from coverage, and hence will be the most likely to purchase insurance for that hazard
Precautionary principles state that when there are threats to the environment, scientific uncertainty should not prevent prudent actions to prevent potentially large damage
Correlated risks from natural disasters
Default risk is the probability of default and helps potential lenders determine whether they should issue loans
In financial risk management, two types of risk measurements are commonly used
The public is increasingly alarmed over effects stemming from toxicants and industrial waste
According to Jorion, banks allocate roughly 60 percent of their regulatory capital to credit risks, 15 percent to market risks, and 25 percent to operational risks
Alternative asset categories have become popular with investors since the 2000–2001 recession
Securitisation is the isolation of a pool of assets and the repackaging of those assets for trading in capital markets. Securitisation began in the 1970s with US banks selling off pools of mortgage-backed loans
Dynamic financial analysis (DFA) is an application of mathematical modelling to businesses. DFA models the key elements that impact an organisation’s operations and simulates thousands of potential situations, determining the firm’s financial condition for each outcome.
Enterprise risk management (ERM) is a recent technique, practiced increasingly by large corporations in industries throughout the world.
Each year consumer products are involved in millions of injuries and thousands of fatalities. Responsibility for this rests with the manufacturers
The word actuary derives from the Latin actuarius, who was the business manager of the Senate of Ancient Rome. It was applied to a mathematician of an insurance company in 1775 in the Equitable Life Insurance Society of London.
ALM is universally defined as a comprehensive analysis of the asset portfolio in light of current liabilities and future cash flows of a going-concern company, incorporating existing asset and liability portfolios as well as future premium flows.
Reliance on models to price, trade, and manage risks carries risk. Models are susceptible to errors