Dynamic Financial Analysis - Understanding Risk and Value Creation in Insurance

The changing business environment in non-life insurance and reinsurance has raised the need for new quantitative methods to analyze the impact of various types of strategic decisions on a company’s bottom line. Dynamic Financial Analysis («DFA») has become popular among practitioners as a means of addressing these new requirements. It is a systematic approach based on large-scale computer simulations for the integrated financial modeling of non-life insurance and reinsurance companies aimed at assessing the risks and the benefits associated with strategic decisions. DFA allows decision makers to understand and quantify the impact and interplay of the various risks that their company is exposed to, and – ultimately – to make better informed strategic decisions. In this brochure, we provide an overview and assessment of the state of the industry related to DFA. We investigate the DFA value proposition, we explain its elements and we explore its potential and limitations.reinsurance, dynamic financial analysis, insurance

Valuing adaptation under rapid change

AbstractThe methods used to plan adaptation to climate change have been heavily influenced by scientific narratives of gradual change and economic narratives of marginal adjustments to that change. An investigation of the theoretical aspects of how the climate changes suggests that scientific narratives of climate change are socially constructed, biasing scientific narratives to descriptions of gradual as opposed rapid, non-linear change. Evidence of widespread step changes in recent climate records and in model projections of future climate is being overlooked because of this. Step-wise climate change has the potential to produce rapid increases in extreme events that can cross institutional, geographical and sectoral domains.Likewise, orthodox economics is not well suited to the deep uncertainty faced under climate change, requiring a multi-faceted approach to adaptation. The presence of tangible and intangible values range across five adaptation clusters: goods; services; capital assets and infrastructure; social assets and infrastructure; and natural assets and infrastructure. Standard economic methods have difficulty in giving adequate weight to the different types of values across these clusters. They also do not account well for the inter-connectedness of impacts and subsequent responses between agents in the economy. As a result, many highly-valued aspects of human and environmental capital are being overlooked.Recent extreme events are already pressuring areas of public policy, and national strategies for emergency response and disaster risk reduction are being developed as a consequence. However, the potential for an escalation of total damage costs due to rapid change requires a coordinated approach at the institutional level, involving all levels of government, the private sector and civil society.One of the largest risks of maladaptation is the potential for un-owned risks, as risks propagate across domains and responsibility for their management is poorly allocated between public and private interests, and between the roles of the individual and civil society. Economic strategies developed by the disaster community for disaster response and risk reduction provide a base to work from, but many gaps remain.We have developed a framework for valuing adaptation that has the following aspects: the valuation of impacts thus estimating values at risk, the evaluation of different adaptation options and strategies based on cost, and the valuation of benefits expressed as a combination of the benefits of avoided damages and a range of institutional values such as equity, justice, sustainability and profit.The choice of economic methods and tools used to assess adaptation depends largely on the ability to constrain uncertainty around problems (predictive uncertainty) and solutions (outcome uncertainty). Orthodox methods can be used where both are constrained, portfolio methodologies where problems are constrained and robust methodologies where solutions are constrained. Where both are unconstrained, process-based methods utilising innovation methods and adaptive management are most suitable. All methods should involve stakeholders where possible.Innovative processes methods that enable transformation will be required in some circumstances, to allow institutions, sectors and communities to prepare for anticipated major change.Please cite this report as: Jones, RN, Young, CK, Handmer, J, Keating, A, Mekala, GD, Sheehan, P 2013 Valuing adaptation under rapid change, National Climate Change Adaptation Research Facility, Gold Coast, pp. 192.The methods used to plan adaptation to climate change have been heavily influenced by scientific narratives of gradual change and economic narratives of marginal adjustments to that change. An investigation of the theoretical aspects of how the climate changes suggests that scientific narratives of climate change are socially constructed, biasing scientific narratives to descriptions of gradual as opposed rapid, non-linear change. Evidence of widespread step changes in recent climate records and in model projections of future climate is being overlooked because of this. Step-wise climate change has the potential to produce rapid increases in extreme events that can cross institutional, geographical and sectoral domains.Likewise, orthodox economics is not well suited to the deep uncertainty faced under climate change, requiring a multi-faceted approach to adaptation. The presence of tangible and intangible values range across five adaptation clusters: goods; services; capital assets and infrastructure; social assets and infrastructure; and natural assets and infrastructure. Standard economic methods have difficulty in giving adequate weight to the different types of values across these clusters. They also do not account well for the inter-connectedness of impacts and subsequent responses between agents in the economy. As a result, many highly-valued aspects of human and environmental capital are being overlooked.Recent extreme events are already pressuring areas of public policy, and national strategies for emergency response and disaster risk reduction are being developed as a consequence. However, the potential for an escalation of total damage costs due to rapid change requires a coordinated approach at the institutional level, involving all levels of government, the private sector and civil society.One of the largest risks of maladaptation is the potential for un-owned risks, as risks propagate across domains and responsibility for their management is poorly allocated between public and private interests, and between the roles of the individual and civil society. Economic strategies developed by the disaster community for disaster response and risk reduction provide a base to work from, but many gaps remain.We have developed a framework for valuing adaptation that has the following aspects: the valuation of impacts thus estimating values at risk, the evaluation of different adaptation options and strategies based on cost, and the valuation of benefits expressed as a combination of the benefits of avoided damages and a range of institutional values such as equity, justice, sustainability and profit.The choice of economic methods and tools used to assess adaptation depends largely on the ability to constrain uncertainty around problems (predictive uncertainty) and solutions (outcome uncertainty). Orthodox methods can be used where both are constrained, portfolio methodologies where problems are constrained and robust methodologies where solutions are constrained. Where both are unconstrained, process-based methods utilising innovation methods and adaptive management are most suitable. All methods should involve stakeholders where possible.Innovative processes methods that enable transformation will be required in some circumstances, to allow institutions, sectors and communities to prepare for anticipated major change

Teacher competence development – a European perspective

This chapter provides an European perspectives on teacher competence development

Tools for climate change adaptation in water management - inventory and assessment of methods and tools

This report summarizes an inventory of methods and tools for assessing climate change impacts, vulnerability and adaptation options, focusing on the water sector. Two questions are central: What are the opportunities for international applications of Dutch methods and tools? And: Which methods and tools available abroad are suitable for application in The Netherlands

Community-based mentoring and innovating through Web 2.0

The rise of social software, often termed Web 2.0, has resulted in heightened awareness of the opportunities for creative and innovative approaches to learning that are afforded by network technologies. Social software platforms and social networking technologies have become part of the learning landscape both for those who learn formally within institutions, and for those who learn informally via emergent web-based learning communities. As collaborative online learning becomes a reality, new skills in communication and collaboration are required in order to use new technologies effectively, develop real digital literacy and other 21st century skills

Space Station Freedom data management system growth and evolution report

The Information Sciences Division at the NASA Ames Research Center has completed a 6-month study of portions of the Space Station Freedom Data Management System (DMS). This study looked at the present capabilities and future growth potential of the DMS, and the results are documented in this report. Issues have been raised that were discussed with the appropriate Johnson Space Center (JSC) management and Work Package-2 contractor organizations. Areas requiring additional study have been identified and suggestions for long-term upgrades have been proposed. This activity has allowed the Ames personnel to develop a rapport with the JSC civil service and contractor teams that does permit an independent check and balance technique for the DMS