Update: Risk Profile, Appetite and Tolerance: Fundamental Concepts in Risk Management

In April 2009, Guy Carpenter's Financial Intelligence Team published a briefing entitled Risk Profile, Appetite and Tolerance: Fundamental Concepts in Risk Management and Reinsurance Effectiveness. That briefing included definitions of Risk Profile, Appetite and Tolerance and how these concepts fit into an Enterprise Risk Management (ERM) framework. It also presented the results of their initial Risk Tolerance Benchmarking study, which summarized the information publicly disclosed in this area.

The update to that study reinforces the conclusion drawn six months ago that (re)insurers increasingly recognize the value of metric-based frameworks and capital models in evaluating their portfolios. Further, as this trend of recognition gains momentum, so does the importance of being able to understand one's place in the rapidly changing risk management space. Accordingly, this briefing revisits the terminology definitions and updates the survey of companies' disclosures in this area.

http://www.guycarp.com/portal/extranet/insights/briefingsPDF/2009/ERM+Up...