News Column

A.M. BestTV: ‘Grey Swans’ Emerge in Insurance Risk Analysis

May 14, 2014



OLDWICK, N.J.--(BUSINESS WIRE)-- In this episode of A.M. BestTV, insurance observers, including Aon Benfield and AIR Worldwide, report that insurers should pay more attention to possible catastrophic events that, while remote, have affected the world and are likely to return. Typically, these unforeseen and high-impact events have been called black swans, but Rade Musulin, chief operating officer of Aon Benfield Analytics Asia-Pacific, said that these so-called black swan events are happening more frequently and need to be better recognized and managed. “We’re increasingly seeing a number of events that have been incorrectly referred to as black swans. These things invariably come as surprises to many risk managers, who often incorrectly assume that just because a risk hasn’t been modeled, the risk doesn’t exist,” said Musulin.

Sometimes referred to as “grey swans,” or “pear-shaped phenomena,” these events, such as solar flares, pandemics, nuclear incidents and geologic emissions, can be anticipated, according to Musulin. He said companies need to develop more sophisticated approaches to risk analysis, and that the insight can be used to supplement models so that risk managers can make better decisions.

Click on http://www.ambest.com/v.asp?v=greyswans514 to view the episode, which also contains commentary from Andy Kao, senior manager of business development at AIR Worldwide.

Recent episodes of A.M. BestTV include:

  • Medical Professional Liability Strong But Long-Term Caution Emerges: A panel of insurers and industry experts review state of the U.S. medical professional liability insurance, including underwriting results, trends, tort issues and what key factors could indicate change ahead: http://www.ambest.com/v.asp?v=mpli514
  • FSOC Report Highlights Life Concerns; Global Risk Roundup: A new report from the Financial Stability Oversight Council focuses on life insurers' use of captives and on investment strategies. Also, recent risks affecting the global insurance industry: http://www.ambest.com/v.asp?v=fsoc514
  • Optis: Market Improves for Insurance Agency M&A: Tim Cunningham, one of the founders of Chicago-based Optis Partners, reports that conditions have strengthened for those looking to sell insurance agencies, though sellers will have to compete against a growing pool of older owners who delayed during the market turndown: http://www.ambest.com/v.asp?v=optis414

    A.M. BestTV covers exclusive A.M. Best information and reports, targeted topics and key developments in the (re)insurance industry every Monday, Wednesday and Friday. Sign up for alerts of episodes at http://www.ambest.com/multimedia/ambtvsignup.html. View A.M. BestTV episodes at www.ambest.tv.

    A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

    Copyright © 2014 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.



    A.M. Best Co.

    Lee McDonald

    Group Vice President, Publication and News Services

    (908) 439-2200, ext. 5561

    lee.mcdonald@ambest.com


    Source: A.M. Best Co.


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    Source: Business Wire