Alternative

Risk Transfer

Alternative Risk Transfer

In concepts for transferring the consequences of risks, of key concern to enterprises are the economic impacts of the occurrence of risk as opposed to the manifestation causes. Conventional insurance products under which insurance benefits are paid on the basis of precisely defined causes of damage events, certainly deliver in parts what companies demand in terms of risk transfer services. Additionally to the conventional insurance products however, in the future an increased demand may be expected on part of firms for novel risk transfer tools discussed under the common umbrella of Alternative Risk Transfers (ART). From the analysis of the Alternative Risk Transfer tools, it follows that they necessitate detailed knowledge of the risk functions for the risks to be transferred in order for the enterprise to be able to assess the costs and benefits of such comprehensive risk transfer products. Among the alternative risk transfer tools, multi-trigger approaches have been conceived. The tools provide that insurance provider liability only triggers where two or more mutually unrelated risks materialise over a defined period. With multi-trigger-based tools, companies may insure against cases where accidentally from two or more risks in a fiscal period, exceptionally high damage arises for each of them, with the actual occurrence probability of such exceptional damage events small in each case, and the damage total for the damage events poses an existential threat to the enterprise.

So the challenge for a Risk Manager is to identify the effective Alternative Risk Transfer concept.

 

Our Enterprise Risk Manager Software supports you by identifying the effective Alternative Risk Transfer concept by aggregation of some risks and calculate the expectancy values T{R(x)i(mean)} and T{R(x)i(worst)} and some Value-at-Risks P{R(x)i(VaR)} for the risk aggregations.

 

Risk Optimization