Downwards counterfactual analysis

Stress and scenario testing are important risk assessment tools.  They also provide useful ways to prepare in advance for adverse scenarios so that management doesn’t have to create everything from first principles when something similar occurs. But trying to imagine scenarios, particularly very severe scenarios, isn’t straightforward. We don’t have many examples of very extreme […]

Island Life

There is a Mauritian insurer called Island Life. Best name ever for an insurance company. I firmly believe in anthropogenic climate change. I am not an expert, but my reading has convinced me of the seriousness of the issues, the overwhelming evidence that it is humans at fault. Having young children makes me seriously concerned […]

Do Data Lakes hide Loch Ness Monsters?

I had a discussion with a client recently about the virtues of ensuring data written into a data warehouse is rock solid and understood and well defined. My training and experience has given me high confidence that this is the right way forward for typical actuarial data.  Here I’m talking in force policy data files, […]

What is Systemic Risk?

Systemic risk is risk to the “system” in some way. In the financial services world, it is often defined in one of two ways: The risk of contagion, where failure of an entity leads to distress or failures of others [micro prudential] The risk of an event that can trigger serious consequences for the real economy. […]

Modelling one side of a two-sided problem

Ah models, my old friends. You’re always wrong, but sometimes helpful. Often dangerous too. A recent article in The Actuary magazine addressed whether “de-risking in members’ best interests?”  I say “recent” even though it’s from August because I am a little behind on my The Actuary reading. In the article, the authors demonstrate that by […]

Open mortality data

The Continuous Statistical Investment Committee of the Actuarial Society does fabulous work at gathering industry data and analysing it for broad use and consumption by actuaries and others. I can only begin to imagine the data horrors of dealing with multiple insurers, multiple sources, multiple different data problems. The analysis they do is critically useful […]

The importance of verification

It’s amazing to test this yourself. Hold down the button of a garage door opener and try to use your vehicle lock / unlock button. It doesn’t work. Simple as that. The signal from the garden variety garage door opener blocks the signal of most (all?) vehicle remotes. Smart criminals are increasingly using this to […]