Risk Appetite and Business decisions

Risk appetite at a high-level is a simple formal statement of what risks an insurer is willing to accept given its business objectives. Understanding and utilising the risk-reward mechanism is perhaps one of the most important commercial challenges for insurers operating under a risk based capital regulatory environment.

The following article outlines the many internal variables to be considered when formulating a risk appetite framework; such as risk strategy, target risk profile, required expected return, capital buffer, and target risk capital. At the same time, these ought to be balanced with the need to meet the expectations of external stakeholders such as regulators, shareholders, capital markets and rating agencies.

Read the full article below to find out more. 

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