Twenty Third Floor

Figuring out the future and the now

Category: managing uncertainty

Actuarial and Risk, communication, financial reporting, insight, insurance, life insurance, managing uncertainty, measurement, Solvency Assessment and Management, Solvency II

Should South Africa Embrace Public SFCR-style Disclosures?

23 May 2025

David Kirk

Solvency and Financial Condition Reports (SFCRs) are a mature feature in Europe under the Solvency II regime, providing extensive public disclosures of insurers’ risk management, capital strength, and governance practices. However, in South Africa and many developing markets, public reporting at this depth is currently not a regulatory requirement. South Africa used to have a…
Read more: Should South Africa Embrace Public SFCR-style Disclosures?
Actuarial and Risk, emerging risk, insurance, life insurance, managing uncertainty, microinsurance, regulatory risk, Solvency Assessment and Management, Solvency II

Stressed to Kill: Greatest Hits of ORSA Modelling Fails

9 May 2025

David Kirk

ORSA reports are meant to be a strategic cornerstone, connecting capital, risk, and business planning. At their best, they give boards clarity on resilience, regulators confidence in oversight, and executives a compass for navigating uncertainty. At their worst, they become slow, disconnected documents that fail to offer real insight or challenge assumptions. This article outlines…
Read more: Stressed to Kill: Greatest Hits of ORSA Modelling Fails
Actuarial and Risk, alternative investments, banking, complexity, credit risk, currency risk, economics, emerging risk, FinTech, inflation, insurance, InsurTech, legal risk, liquidity risk, managing uncertainty

Inflation, Bitcoin & Financial Risk – Does This Matter for Insurance?

17 March 2025

David Kirk

This is a bit off-topic from my usual discussions on insurance, risk, and capital modelling, but financial and economic risk matters deeply. And for insurers, we’ve seen how things can go very wrong. Hyperinflation, Currency Crises & Insurance Industry Collapse Hyperinflation destroyed Zimbabwe’s insurance sector, and decades later, it still hasn’t recovered. Currency crises in…
Read more: Inflation, Bitcoin & Financial Risk – Does This Matter for Insurance?
Actuarial and Risk, banking, Basel III, capital, capital structure, costofcapital, life insurance, managing uncertainty, Solvency Assessment and Management, Solvency II

The Loss-Absorbing Capacity of Distant Dividends That Can Still Be ‘Foreseen’

24 February 2025

David Kirk

Foreseeable dividends remain a grey area in Solvency II and South Africa’s Solvency Assessment and Management (SAM). While the concept seems straightforward—capital that is likely to be distributed as dividends should not count towards regulatory solvency—its practical application is anything but clear. Regulatory Ambiguity: When Is a Dividend Foreseeable? The official guidance under Solvency II…
Read more: The Loss-Absorbing Capacity of Distant Dividends That Can Still Be ‘Foreseen’
Actuarial and Risk, capital, financial risk, managing uncertainty, market risk, measurement, statistics

The Perils of Value-at-Risk and Portfolio Insurance

9 December 2024

David Kirk

It is essential to consider critical viewpoints that challenge conventional wisdom—especially when it comes to Value-at-Risk (VaR). In a thought-provoking dialogue, Nassim Taleb critiques VaR and highlights the dangers of portfolio insurance and dynamic hedging strategies. Here are key arguments from his 1997 forceful response to Philippe Jorion’s support for VaR. Misplaced Precision and Concrete…
Read more: The Perils of Value-at-Risk and Portfolio Insurance
financial reporting, insight, insurance, life insurance, managing uncertainty, measurement

Risk Appetite – When is change good?

28 November 2024

David Kirk

Effective risk management in insurance relies on well-defined risk appetite measures and limits. These frameworks guide organisations in assessing and managing their risk exposure, ensuring alignment with strategic objectives. However, the reasons for adjusting these measures can significantly influence an organisation’s effectiveness in navigating risks. Risk Appetite Measures and Limits Risk appetite articulates the level…
Read more: Risk Appetite – When is change good?
Actuarial and Risk, banking, capital, managing uncertainty, market risk, measurement

Value at Risk – not always a monster, but normally it is.

6 November 2024

David Kirk

Nassim Taleb is not a fan of Value At Risk (VaR) “You’re worse off relying on misleading information than on not having any information at all. If you give a pilot an altimeter that is sometimes defective he will crash the plane. Give him nothing and he will look out the window. Technology is only…
Read more: Value at Risk – not always a monster, but normally it is.
competition, complexity, insight, managing uncertainty, optimisation

The Mathematics and Game Theory Behind a Simple Number Game

5 November 2024

David Kirk

My son recently came home from school excited about a number guessing game they’d played in class. The rules were simple: one child thinks of a number, and then the class takes turns asking questions about it. The first child to identify the exact number wins. Before reading on, pause and consider: What strategy would…
Read more: The Mathematics and Game Theory Behind a Simple Number Game

About David Kirk

Featured Posts

The Complexities of Comparing SCR Cover Ratios Across Insurers
by David Kirk
In the insurance industry, we often use Solvency Capital Requirement (SCR) cover ratios as a key metric for comparing insurers’ financial strength. While these ratios… Read more: The Complexities of Comparing SCR Cover Ratios Across Insurers
One answer could be pet insurance
by David Kirk
I firmly believe major demographics shifts are going to have massive social, political, economic, financial market and commercial impacts in the coming decades. The balance… Read more: One answer could be pet insurance
A piece of the failure puzzle – decreasing insurer failure rates through Skilled Person Reviews
by David Kirk
Every failure hits policyholders’ savings or cover, impact their lives and their livelihoods. They destroys shareholder value and decrease confidence in the entire financial sector.… Read more: A piece of the failure puzzle – decreasing insurer failure rates through Skilled Person Reviews
How and why insurers fail
by David Kirk
I’ve been updating my presentation from 2021 on “How and Why Insurers Fail”. I now estimate the annual failure rate (or at least getting into… Read more: How and why insurers fail
The hidden dangers of opinion shopping and trusting good news.
by David Kirk
I had a recent discussion on the value of getting a second opinion. There’s the old line that “if you want five opinions, ask three… Read more: The hidden dangers of opinion shopping and trusting good news.
40,000
by David Kirk
40,000. That’s the ballpark figure I usually work with as the minimum number of micro insurance policies required for scale. The expenses of running even… Read more: 40,000
IFRS17 may not kill off EV
by David Kirk
Will IFRS17 kill off Embedded Value (EV) reporting in Africa? Or will it finally bring Market Consistent Embedded Value (MCEV) to life? I gave a… Read more: IFRS17 may not kill off EV

Categories