Language of risk
The language of insurance risk is merging with the language of derivatives and financial risk faster than ever.
Impact of capital markets
As the convergence of traditional insurance/reinsurance capital and “alternative capital” merge there will be some structural changes. The language of risk will be one of these changes. How risk is sourced, underwriting, built into a portfolio, regulated and invested in has forever changed. Capital efficiency, basis risks and matching investors with the right risks will be the new challenges.
Analytics and Forecasting
Analytic capabilities and ability to navigate as shark in the market is of utmost importance (See our discussion about the future of insurers). Scale for the purpose of scale is dead in the eyes of investors. Investors, insureds, Cedants all have the power and tools of their own data to increase the amount of their risk tolerance or transfer to a counterparty.
We could explain all the reasons why this is happening (low interest rates, rise of enterprise rise management, non correlation focus, 2007 recession) but let’s just focus on what to do now.
Future need of risk professionals
The top ranks in risk will be expected to understand both languages and those who rise to the top in risk will have backgrounds and educations in both, for example MBA plus CPCU and FRM or CFA, with 20 years in traditional reinsurance and alternative capital.
Depending on where you are in your career now may be time to work hard and continue to specialize or it is the time to not get left behind as shark bait. If you use the InsuranceShark mentality, there is always someone in the ocean looking for or working to eat your next meal, you must constantly work to maintain your size and strength as an InsuranceShark.
We will update this list but here are a few resources to buy:
These will be the tools of the InsuranceSharks of the future.
New sharks are being born each day so make today the day you swim forward and own the ocean.
Feel free to comment below if you know of other must have books to add to the list.