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CRO RISK FORUM: Risk, blinking in the light
18 August 2009
CROs must not leave risks in the dark: that’s where they grow, says Willis Re’s David Ingram*
(Re)insurance firms have for years scrambled to catch up with banks. But in the wake of the global financial crisis, many of the largest and most sophisticated banks lie in ruins and most (re)insurers are dented but not severely damaged. In recent years, banks and insurers have had very different ways of approaching risk and those differences may be at the root of their different experiences. Bank risk management has evolved primarily from their trading operations. Their primary, perhaps sole, measure of risk relates to market price fluctuations and their primary, perhaps sole, tool for risk management is trading or selling their risk in one form or another. Their time horizon for risk management follows their trading time horizon – usually measured in days. (Re)insurers, on the other hand, have long had a buy-and-hold approach to risk. The time horizon for (re)insurers is measured in years or even decades. Bankers...
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