Page 66 - RISK Management IC86 Ebook

Risk Management

Risk transfer and financing spectrum - Traditional > Alternative

Finite risk reinsurance

n Finite risk reinsurance has developed into an effective tool to
allow insurance companies to retain more risk but, at the same
time, to smooth results over time by combining risk financing
rather than risk transferring techniques.

Integrated Risk Management

n Integrated risk management concepts are generally understood
to be covers combining insurance risks with financial market
risks, such as currency, interest rate or equity market risks.
They are an excellent example of the convergence of the
insurance and the capital markets. Integrated risk management
seeks to meet such objectives as
l "bottom-line" comprehensive balance sheet protection,
l protection against downside risk and major
fluctuations of operating result,
l better use of capacity by excluding over hedging effects.

Insuratization

n Possibly structured as multi-line and multi-year concepts
similar to finite risk reinsurance concepts, integrated risk
management concepts try to make use of diversification effects

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