Actuarial Risk

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Actuarial Risk

The possibility that an actuary's assessment of a potential policyholder's risk may turn out to be incorrect. For example, if an actuary is using statistical models and determines a policyholder is likely to live for another 30 years, there is an actuarial risk that the policyholder will die tomorrow. This would result in a large loss for the insurance company. Actuaries work to improve their statistical models to minimize actuarial risk. See also: Actuarial analysis.
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Industrial accidents may be more amenable to regulation because actuarial risks may be easier to measure and reduce, but the socio-cultural and political context is still critical.
It serves as a reminder to practitioners that good regulation must be both operationally oriented to address the specific actuarial risks and socio-cultural fears, as well as being politically sensitive.
First, actuarial risk, which is the traditional understanding of risk that is more or less quantifiable by technical experts.
6 billion, Prudential will take on all of the investment and actuarial risks, as well as administering the benefits, covered under this transaction, Tyson said.
Stiglitz said giant banks should be "forced" to return to the "boring business of doing conventional banking," and that too-big-to-fail insurance companies should be "limited" to selling "conventional insurance products, with well defined actuarial risks.
The author notes that when the PBGC was established, a private pension insurance market did not exist, partly because potential insurers lacked sufficient information on actuarial risks.
As insurers know, the latter includes actuarial risks, most notably property-liability and mortality risks.
Yet, the resources of the industry have traditionally been focused on actuarial risk management-and then only in an objective statistical sense.
Insurers must leverage their knowledge of the actuarial risks faced in retirement, and find cost-effective ways to mitigate those risks by using existing product designs in different combinations, or creating entirely new ones.