January 28th, 2015

GC Videocast - Linking Risk Appetite to Strategy

Posted at 1:00 AM ET

In the second video in the Holistic Balance Sheet Management series, Andrew Cox, Capital Optimization, Guy Carpenter and Niall Clifford, Financial Strategy Group, Mercer, explore how companies should approach investment risk and the link between investment strategy, risk appetite and reinsurance strategy. A key focus for insurance companies should be to link their investment strategy with their risk appetite metrics. While any increase in return on capital may seem very attractive, it is important that companies ensure that the risks they are taking are in line with their risk appetite and that they are aware of their constraints, allowing them to take risks in a measured way. Investment strategy should be considered alongside regulatory requirements, as a key aspect of Solvency II relates to how well each company understands the risks in its portfolio.

Capital requirements are also a fundamental issue. Companies using an internal model need to ensure that their capital calculations are appropriate and accurately cover all areas of risk they are exposed to. Reinsurance can be used as an investment tool along with having in place a robust risk management framework within the organization. This will ensure that insurers are able to measure, manage and identify their risks and provide the tools to report on them - an important factor in fulfilling the reporting requirements under Pillar 3 of Solvency II.

Linking Risk Appetite to Strategy 


2419 advanta mercer 051114 clip 02-HD from Guy Carpenter on Vimeo.

Click here to register to receive e-mail updates >>


Guy Carpenter & Company, LLC provides this post for general information only. The information contained herein is based on sources we believe reliable, but we do not guarantee its accuracy, and it should be understood to be general insurance/reinsurance information only. Guy Carpenter & Company, LLC makes no representations or warranties, express or implied. The information is not intended to be taken as advice with respect to any individual situation and cannot be relied upon as such. Please consult your insurance/reinsurance advisors with respect to individual coverage issues.

Readers are cautioned not to place undue reliance on any historical, current or forward-looking statements. Guy Carpenter & Company, LLC undertakes no obligation to update or revise publicly any historical, current or forward-looking statements, whether as a result of new information, research, future events or otherwise.

Statements concerning tax, accounting, legal or regulatory matters should be understood to be general observations based solely on our experience as reinsurance brokers and risk consultants, and may not be relied upon as tax, accounting, legal or regulatory advice, which we are not authorized to provide. All such matters should be reviewed with your own qualified advisors in these areas.

This post or any portion of the information it contains may not be copied or reproduced in any form without the permission of Guy Carpenter & Company, LLC, except that clients of Guy Carpenter & Company, LLC need not obtain such permission when using this post for their internal purposes.

The trademarks and service marks contained herein are the property of their respective owners.

AddThis Feed Button
Bookmark and Share

Related Posts