Crossing Thin Ice

Concentration is added by doubling down on things you do well. This two-part story considers strategic drivers that add to concentration and tactical methods to mitigate these risks. By Dave Ingram and Max Rudolph.

When a catastrophic event hasn’t happened since 1700 there is not much historical data to aid those who live there or insure residents. Here are some of the basic concerns. By Max Rudolph

There is a story about ERM that most insurers can tell. A story with four chapters: ERM Framework, Individual Risks, Aggregate Risk & Capital and the ERM Journey. Usually there isn’t enough time to tell the the ratings analyst all four chapters, so you have to choose. By Dave Ingram

Tiny pieces of plastic are found in the ocean, soils and the human body. This can’t be good. Scientists are still learning about the implications of microplastics, but it’s clear that better recycling and reduced use of plastic bottles, fishing nets, micro beads and nurdles are a start. By Max Rudolph

Stress tests come in a wide variety of levels of adversity. This podcast suggests that we all should focus on just three: normal volatility, realistic disasters and worst case scenarios. Aligning the appropriate stress test to the audience is very important when managing risk for an insurer. Management, Boards and Regulators will each find something to like with these three levels of stress. By Da...

Emerging risks play a key role in risk analysis. One such emerging risk, Solar Storms, is much more than just pretty northern lights. An impactful solar storm happened as recently as 1859. Then, some problems with telegraph wires were reported, just imagine how much more we depend upon electronics now than we did in 1859. That is exactly what we do in this podcast.

A deep dive into the risk selected as the Most Dangerous of 2023.  We compare recent inflation spikes against past events, look at the drivers of the current bout of inflation, the impact on the insurance industry along with the most common responses.  In addition, we also invert the question and consider what would cause future inflation to be very low.  By Dave Ingram and Max Rudolph

Fear or Danger is a false choice. But using rational thought to balance fear and danger, and find an appropriate response, is very difficult. This repeatable process for thinking through how to react can improve your likelihood of success. Risk Intelligence: https://actuary.org/article/three-components-of-risk-intelligence/  

As humans encroach on new ecosystems diseases found in animals and birds can jump to a new home inside us. We think about coronavirus and influenza but should monitor closely diseases like bird flu and Ebola. By Max Rudolph

Over 200 respondents in the Dangerous Risks to Insurers Survey reordered the top risks, with Inflation swapping with Cybersecurity and cybercrime for the #1 spot, and Global/National recession moving into the top 5 at #3. By Dave Ingram and Max Rudolph

This podcast is a challenge for you to consider something that is likely not yet on your risk register. Could the spread of bacteria with resistance to antibiotics have an impact on your business plans? We provide some questions that you might ask as well as some preliminary answers.

A major loss often causes management to question past decisions. They might even reverse some of them, but this may be an overreaction. The Chief Risk Officer improves the discussion by bringing a systematic review of the risk related decisions that preceded the loss. In many cases potential problems can be fixed without taking drastic and dramatic actions. 

We have generally used a continuation of the current environment as our base assumption. But now, with the encouragement of the NY DFS, that is being treated as worse than “Moderately Adverse” scenario. Insurers need to develop a robust set of stress scenarios to test reserve adequacy that include continuation of current conditions and a variety of variations in experience, not just interest rates...

When you encounter vastly different risk taking behaviors at two different businesses, you shouldn’t automatically presume that they are driven by totally different risk tolerances. In some cases they are actually the result of similar risk tolerances and major disagreements in risk assessment. Just ask the Three Little Pigs.

The current real life scenario combines a pandemic, weather events, supply chain issues, inflation and a regional war all at the same time. Multi risk scenarios can provide major insights about a firm’s resilience that do not necessarily happen with single risk scenarios or even with stochastic models. You may not agree with all of them. They are meant to encourage you to think rather than to be p...