Insurers are generally required to optimize economic capital to evaluate the combined effects of risk-taking activities and the impact of such activities on economic value.

By incorporating risk-based capital models into their strategic decision-making processes, insurers can help optimize capital allocation from a risk-versus-reward viewpoint, and possibly achieve competitive advantage.

View the image.
View the image.

True capital optimization can only occur when taking into consideration all aspects of the organization. In my next blog post, I will discuss the manner in which an organization-wide view improves the efficiency of risk-management models.

To learn more, download: Risk-Adjusted Operating Model: Transformation Strategy for Insurers.

Submit a Comment

Your email address will not be published. Required fields are marked *