TY - BOOK AU - Pompella,Maurizio AU - Scordis,Nicos A. TI - The Palgrave Handbook of Unconventional Risk Transfer SN - 9783319592978 AV - HG1501-3550 U1 - 332 PY - 2017/// CY - Cham PB - Springer International Publishing AG KW - Asset-backed financing KW - Electronic books N1 - Intro -- Foreword -- Contents -- List of Figures -- List of Tables -- 1: Introduction -- Part I: Risk Management Strategies and Perspectives -- 2: A Theoretical Perspective on Risk Management -- 2.1 Introduction -- 2.2 Why Should a Firm Manage Risks? -- 2.2.1 A Point of Departure: Risk Neutral Owner and a Linear Exposure -- 2.2.2 Risk Aversion on the Part of the Owner: A Reason to Lower Risk? -- 2.2.3 Why Variability Might Lower the Value of the Firm -- 2.2.4 Why Variability Could Increase the Value of the Firm -- 2.3 Sources of Changes in Profit-Risk and Uncertainty -- 2.4 Ways to Manage Risk and Uncertainty -- 2.4.1 Hedging Risk Due to s with Derivatives and Insurance Contracts -- 2.4.2 Operational Hedging -- 2.4.3 Flexibility -- 2.4.4 Managing Liquidity and Ensuring Access to New Funds -- 2.5 Concluding Remarks -- Notes -- References -- 3: A Practical Perspective on Corporate Risk Management -- 3.1 Introduction -- 3.2 Risk and Uncertainty -- 3.2.1 Decisions Under Conditions of Risk -- 3.2.2 Decisions Under Conditions of Uncertainty -- 3.3 Challenges in Pricing Corporate Risk -- 3.3.1 Different Consumption Preferences -- 3.3.2 Choosing the Right Metric -- 3.3.3 In Need of Prudence -- 3.4 Why Corporations Manage Risk -- 3.4.1 The View from the Academy -- 3.4.2 Towards a Risk Strategy -- References -- Part II: Conventional vs Unconventional Transfer -- 4: Reinsurance, Insurability and the New Paradigms of Unconventional Risk Transfer -- 4.1 Traditional Reinsurance -- 4.2 How Conventional Transfer Works -- 4.3 Unconventional Transfer and ILSs -- 4.4 The Innovation in the "Life Insurance" Sector -- 4.5 Insurability of Risks -- 4.6 Securitisation -- 4.7 ART Attractiveness -- 4.8 Asymmetries and Parametric Triggering -- 4.9 New Markets for Life Insurance Policies -- 4.10 From Viatical to Life Settlement; 4.11 Premium Financing and STOLI Policies -- 4.12 More on the Enterprises Perspective -- 4.12.1 A Taxonomy of Risks and Actors -- 4.12.2 Pure Risk Management and CAT Risks -- 4.12.3 Pure Business Risk Financing and Control -- 4.12.4 The Risk Management Process, Prevention, Protection, and Resilience -- 4.12.5 Cost of Risk for Enterprises -- 4.13 More on the Insurers' Perspective -- 4.13.1 Subscribed and Subscription Risk -- 4.13.2 Exposure Limits -- 4.14 The New Paradigms of Unconventional Transfer -- 4.14.1 Structured Finance and Insurers -- 4.14.2 A Brief Outline of Market Products and the New Way -- 4.14.3 Risk Warehousing and Intermediation: The Actuarial Versus the Financial View -- Notes -- References -- Arrow, K.J. 1970. Insurance, Risk and Resource Allocation. In Essays in the Theory of Risk Bearing, ed. K.J. Arrow. Amsterdam: North Holland. -- Suggested Further Readings -- 5: Enterprise Risk Management and the Risk Management Process -- 5.1 Introduction -- 5.2 Preliminary Definitions and Concepts -- 5.2.1 What Is Risk? -- 5.2.2 What Is Enterprise Risk Management? -- 5.2.3 The Risk Management Process -- 5.3 Objectives of Risk Management -- 5.3.1 How Does Risk Affect Value? -- 5.3.1.1 The Valuation Model -- 5.3.1.2 How Does the First Notion of Risk (Expected Losses) Affect the Valuation Model? -- 5.3.1.3 How Does the Second Notion of Risk (Variability) Affect the Valuation Model? -- 5.3.1.4 Indirect Effects of Risk (Uncertainty) Reduction on Expected Cash Flows5 -- 5.3.1.5 Financial Distress Costs -- 5.3.1.6 Costs of Raising External Capital -- 5.3.1.7 Taxes -- 5.3.2 Justification for Enterprise Risk Management -- 5.4 Risk Identification -- 5.5 Risk Assessment -- 5.6 Evaluate Alternative Risk Management Treatments -- 5.7 Monitor and Adjust -- 5.8 Examples of ERM Processes -- 5.8.1 United Grain Growers9; 5.8.2 Hydro One -- 5.8.3 American Electric Power10 -- 5.8.4 Nationwide11 -- 5.9 Decision-Making Mistakes -- 5.9.1 Behavioural Biases -- 5.9.1.1 Saliency Bias -- 5.9.1.2 Availability Bias -- 5.9.1.3 Anchoring Bias -- 5.9.1.4 Confirmation Bias -- 5.9.1.5 Optimistic Bias -- 5.9.1.6 Failure to Ignore Sunk Cost -- 5.9.1.7 Other Risk Management Mistakes -- 5.9.1.8 Agency Problems -- 5.10 Risk Appetite -- 5.11 Summary -- Notes -- Appendix 1: Risk Management Processes Proposed by Various Risk Management Organizations -- Casualty Actuary Society -- The Committee of Sponsoring Organizations of the Treadway Commission (COSO) -- References -- 6: Credit Risk Transfer with Single-Name Credit Default Swaps -- 6.1 Introduction -- 6.2 The Composition of the Single-Name CDS Market -- 6.2.1 Aggregate CDS Market Activity -- 6.2.2 Single-Name CDSs by Type of Underlying -- 6.3 Single-Name CDSs -- 6.3.1 Reference Entity -- 6.3.1.1 Type of Reference Entity -- 6.3.1.2 Credit Risk of Reference Entity -- 6.3.2 Maturity/Tenor -- 6.3.3 Cost for the Protection Purchaser -- 6.3.4 Credit Events -- 6.3.4.1 The 1999 and 2003 Definitions -- 6.3.4.2 The 2009 "Big Bang Protocol" and Supplement to the 2003 Definitions -- 6.3.4.3 Example of the Determinations Process: The Hellenic Republic Credit Event -- 6.3.4.4 The 2014 Definitions -- 6.3.5 Settlement Methods -- 6.3.5.1 Physical Settlement -- 6.3.5.2 Auction Settlement -- 6.3.5.3 Cash Settlement -- 6.3.6 Deliverable Obligations -- 6.4 Conclusion -- Notes -- References -- Part III: Risks by Class -- 7: Natural Hazards -- 7.1 Introduction -- 7.2 Earthquakes -- 7.3 Volcanoes -- 7.4 Landslides -- 7.5 Tropical Cyclones -- 7.6 Tornadoes -- 7.7 Tsunami -- 7.8 Flood -- 7.9 Extraterrestrial Impactors -- 7.10 Space Weather -- References -- 8: Anthropic Perils and Man-Made Risks -- 8.1 Introduction -- 8.2 Human Error; 8.2.1 Defence-in-Depth: The Swiss Cheese Model -- 8.3 Industrial Accidents -- 8.3.1 Industrial Pollution -- 8.3.2 Maritime Accidents -- 8.3.3 Oil Pollution Risk -- 8.3.4 Aviation Accidents -- 8.3.5 Accidents in Space -- 8.4 Terrorism -- 8.4.1 Terrorism in the Name of Religion -- 8.4.2 Terrorism and the Media -- 8.4.3 Implications for Terrorism Insurance Loss -- 8.5 Cyber Attacks -- 8.5.1 Cyber Loss Footprints -- 8.5.2 Hacker Groups -- 8.5.3 Physical Damage from Cyber Attacks -- 8.5.4 Cyber Warfare -- References -- 9: Mortality and Longevity Risk -- 9.1 Introduction -- 9.1.1 Mortality Risk -- 9.1.2 Longevity Risk -- 9.1.3 Risk Management Tools -- 9.2 Biometric Risks in the Solvency II Framework -- 9.3 Quantitative Assessment -- 9.3.1 Risk Components -- 9.3.2 Early Developments -- 9.3.3 The Lee-Carter Model -- 9.3.4 Criticism and Extensions of the Lee-Carter Model -- 9.3.5 Recent Alternative Mortality Forecasting Techniques -- 9.4 Traditional Risk Management Approaches12 -- 9.5 Mortality-Linked Securities -- Notes -- References -- 10: Country Risk: Case Study on Crises Examples and Lessons Learnt -- 10.1 Introduction -- 10.2 Country Risk Definition -- 10.3 Approaches to Country Risk Assessment -- 10.4 FDI and Country Risk Level -- 10.5 Country Risk Case Study -- 10.5.1 Asian Crisis of 1997-1998 -- 10.5.2 Russian Financial Crisis of 1998, Its Prerequisites -- 10.5.3 Argentine Financial Crisis of 1999-2001 and Its Prerequisites -- 10.5.4 Russian Financial Crisis of 2008 and 2014 -- 10.5.5 Great Britain-Brexit19 -- 10.6 Conclusion -- Notes -- References -- Part IV: Vulnerability, Market Solutions and Societal Implications -- 11: Disaster Vulnerability -- 11.1 Introduction -- 11.2 Fundamentals: Vulnerability and Disaster Vulnerability -- 11.3 The Sendai Framework -- 11.4 Definitions and Concepts of Vulnerability; 11.4.1 Vulnerability -- 11.4.2 Response Capacities -- 11.4.3 Resilience -- 11.5 Conceptual Frameworks of Vulnerability -- 11.5.1 The Double Structure of Vulnerability-Development Discourse -- 11.5.2 The Pressure and Release Model (PAR Model) -- 11.5.3 Vulnerability as One Component of Disaster Risk -- 11.5.4 The MOVE Framework -- 11.5.5 Vulnerability Within the Climate Change Adaptation Research -- 11.6 Application Area: Vulnerability and Urbanisation -- 11.7 Conclusions -- References -- 12: Insurance-Linked Securities: Structured and Market Solutions -- 12.1 Introduction -- 12.2 Insurance-Linked Securities (ILS)-Carriers and Instruments by Class -- 12.3 Catastrophe Bonds (CAT Bonds) and Derivatives -- 12.3.1 CAT Bonds -- 12.3.2 Catastrophe Options and Derivatives -- 12.4 Finite Risk Reinsurance (Finite Re) -- 12.5 Contingent Capital -- 12.6 Weather Derivatives -- 12.7 Other ART Techniques -- 12.8 Summary -- Notes -- References -- 13: Longevity Risk Transfer -- 13.1 Introduction -- 13.1.1 The Bittersweet Challenge -- 13.2 Sources of Longevity Risk -- 13.2.1 The Individual Perspective -- 13.2.2 Governments -- 13.2.3 Insurers -- 13.2.4 Corporate Group Pension Schemes -- 13.2.5 Life Settlement Funds -- 13.2.6 Lifetime Mortgages (Also Known as Equity Release Mortgages) -- 13.3 Properties of Longevity and Longevity Risk -- 13.3.1 Characteristics -- 13.3.1.1 Long Duration -- 13.3.1.2 Opposite to Mortality Risk -- 13.3.1.3 Measurement Is Part Objective, Part Subjective -- 13.3.1.4 Longevity Is Largely the Outcome of a Lagged Process -- 13.3.1.5 Pricing Is Marked-to-Model Rather than Marked-to-Market -- 13.3.2 Longevity Risk Components -- 13.3.3 Historical Projections of Life Expectancy -- 13.3.4 Sources of Uncertainty in Longevity Trends -- 13.3.5 Longevity Trend Models -- 13.3.6 The Socio-economic Dimension; 13.4 Why Organisations Wish to Cede Longevity Risk UR - https://ebookcentral.proquest.com/lib/orpp/detail.action?docID=4939354 ER -