State Support Mitigates M&R Shortfall Risk
- Infrastructure Renewal: Stronger
There can be a shortfall risk
if investors choose highly conservative portfolios with low expected return.
Thus, certain kinds of social stimuli may facilitate optimal responding in situations of shortfall risk
when it is optimal to cooperate with others.
MOST LIKELY PATH TO THE SHORTFALL RISK
UNDER THE OPTIMAL HEDGING.
In these situations, liquidity risk can have a significant impact on the overall success of the investment program and result in shortfall risk
We then examine whether an optimal risk management strategy consisting of gap insurance and an index-linked instrument can increase the net shareholder value (and reduce shortfall risk
) as compared to a hedging strategy that only includes an index-linked instrument without gap insurance.
If our target is inflation plus five, and we are entirely in cash, we have no volatility risk, but we have a high shortfall risk
. Our objective is to put together a portfolio that gives us the best chance of beating our goal.
While risk in the accumulation phase is often summed up by volatility, the central focus in the distribution phase becomes shortfall risk
, or the risk of outliving your money.
NORWICH Union yesterday warned of a shortfall risk
in nine out of 10 of their mortgage endowment policies.
The similarity is that in both cases there is a mismatch between the market-risk of the assets and liabilities that exposes the government guarantor to substantial shortfall risk
Policy providers were accused of not warning of the shortfall risk
and many have had to compensate the policyholders.