CS-14 - ERM in an Unprecedented Market Environment

This session explores AM Best's approach to ERM and its importance within the current market environment. As risks have become intertwined and increasingly complex, (re)insurers cannot expect to be immune to catastrophe events, cyber-attacks, economic slumps, and supply chain disruptions.
While ERM has evolved rapidly following the financial crisis, COVID-19, the Russia-Ukraine conflict, climate risk, ESG, and the elevated levels of inflation followed by the near-collapse of Silicon Valley Bank and CSFB serve to emphasize the variety of challenges the market faces, and that unknown unknownsor unexpected accumulations that can affect (re)insurers still exist. These events are testing (re)insurers ERM approach and their resilience to current market conditions.
This session will place emphasis on the ability for (re)insurers' balance sheets to absorb extreme events, including the importance of stress testing, reverse stress testing, and capital remediation measures. Stress testing and non-modeled risks has long been identified by AM Best, as an area of weakness for many insurers. Stress tests should provide crucial information about the sensitivity of capital adequacy.