RISK MEASUREMENT IN THE INSURANCE INDUSTRY IN THE SOLVENCY II FRAMEWORK

Insurance companies are exposed to various financial risks in the course of their business. In order to improve their asset and liability management, insurance companies are focusing on identifying, measuring, monitoring and controlling their financial risks. Nevertheless, before risks can be managed, they must first be modeled, and therein lies the challenge. In this regard, regulators have created the Solvency II regime, as a solution to the need for effective risk management strategies. Although Solvency II provides viable principles and a coherent general structure, risk measurement may not operate optimally when the wrong risk measure is applied.