Analysis of (re)insurer’s business that tabulates risks into bands of similar values, showing the number of risks in each category, average values, aggregate values and aggregate premiums, etc.

Measures introduced into an insured organisation to mitigate the effects of risks that cannot realistically be avoided altogether. Measures vary according to the situation but the installation of burglar alarms, sprinkler leakage systems and implementation of quality control procedures are all examples.
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Any measure designed to reduce the size of those losses which are not prevented.

Member-owned liability insurance companies. Set up in the US in the face of a ‘hard market’, a number of trade associations or groups of companies combined to form risk retention groups as allowed under the Liability Risk Retention Act 1986. The groups operate as insurance companies limited to writing liability covers for groups with a common interest. RRGS require members to capitalise the company. Many of the groups focus on pollution liability or product liability.
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A type of liability insurer owned by the policyholders. The members in this type of organization must be in the same type of business, so that they are exposed to the same type of liability risks. The organization spreads liability equally between the members and offers a different way of financing a liability.

Risk assumption techniques.

The amount of risk that an investor, individual or business is willing to assume to achieve a specific goal. Risk tolerance is a function of financial capacity, willingness to take risks and the overall profile of the business or individual. The risk profile can be plotted on a risk map, i.e. a probability/ impact matrix. Financial services professionals need to understand the risk tolerance levels of their clients. See Figure 7.

Decision stage of risk management when the firm decides how to respond to risk. The options include risk transfer (insurance and non-insurance), risk financing; reduction, avoidance, prevention, control, etc. This is followed by implementation.

A measure of the capital required to absorb any unexpected losses that result from the risks an organisation assumes in regard to its business and operational activities. In insurance RBC management means an insurer calculates the capital needed to support different classes of business. Overall RBC is expressed as a ratio, the total capital of the company divided by the company’s RBC as determined by formulae. The FSA has proposed that insurers will be required to hold the higher amount of minimum capital requirement as set out in the EC Directives and enhanced capital requirement, a more risk sensitive calculation specified by the FSA.

Excess of loss reinsurance covering losses on policies issued or renewed during the treaty period until they expire. The attachment point is the key.
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UK: a type of reinsurance; in excess of loss property reinsurance, a risks attaching clause means that cover continues until the expiry of the original risk.