Page 64 - RISK Management IC86 Ebook
P. 64
Risk Management
Chapter - 6
Alternative Risk Transfer
Mechanisms
Brief history of the ART market
n A successful risk management strategy may seek to minimize
risks by utilizing tools other than traditional insurance risk
transfer. Alternative risk financing may mean two things:
l Traditional products used in a non-traditional manner or
l Non-insurance financial products that mitigate risk.
n Alternative Risk Transfer`s (ART) main goal was to retain
more risk by means of risk management solutions deploying
self financing mechanisms.
n During the last decade an increased demand for financial
concepts including risk transfer led to the development of a
second generation of so-called finite risk reinsurance products
combining risk financing and risk transfer techniques.
Newly issued accounting and regulatory guidelines in some
leading financial reinsurance markets contributed to this
demand.
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