Contact:
Jenifer Shockley, 404-413-7078
J. Mack Robinson College of Business
ATLANTA - The world's leading risk and actuarial research departments have come together under the academic and analysis arm of global insurance broker Willis Group Holdings to support the development and use of economic capital models required under Solvency II - a set of regulations for insurance firms in the European Union slated to go into effect on January 1, 2013 - and similar regulatory and rating regimes worldwide.
Economic capital models are large-scale simulation models designed to capture material risks underwritten by insurers and banks, and are the basis for risk and capital decisions in financial service companies. Although insurers and reinsurers rely on the discipline to address fundamental challenges, tactical uncertainties, and day-to-day choices of how best to model and manage disparate risk, it is in many ways still in its infancy. Given increasing global regulation, the sector is in need of a common understanding of economic capital modeling, including peer-reviewed methodologies, tools, and best practices to operate with confidence.
To address this need, Willis has founded the Willis Research Network Economic Capital Forum at Georgia State University in partnership with ETH Zurich - RiskLab Switzerland and the Risk Management Institute of the National University of Singapore. The forum, a facility for collaboration between academia, industry, and policy-makers, will be located in the Department of Risk Management and Insurance at Georgia State's J. Mack Robinson College of Business.
Scientific advances by the forum and elsewhere in academia have the potential for far-reaching impact on the measurement and management of risk - to the extent that the findings are accessible in easily adopted formats. In order to enhance such accessibility, the forum will collaborate with industry on a technology transfer program designed to shorten the time required to convert cutting-edge research into commercially viable applications.
Said Rowan Douglas, Willis Group CEO of Global Analytics and Willis Research Network Chairman, "Our partnership with Georgia State is a significant development for our industry. Economic capital models are the backbone of insurance company operations and risk management, but we need greater understanding and a new culture to employ them wisely. The forum provides that environment."
Richard Phillips, chair of the Robinson College Department of Risk Management and Insurance, added: "At Georgia State and across academia we have been waiting some years to do this; it was about finding the right industry partner. The Willis Research Network provides a unique platform between science and finance producing a powerful new supply chain of expertise and capabilities into the industry and wider society. Willis is a reinsurance broker but they are now an intellectual broker too."
The forum is co-funded by Georgia State and Willis for at least five years across the Americas, Europe, and Asia Pacific. It will be overseen by a management board co-chaired by Douglas and Phillips. Professor Paul Embrechts of ETH Zurich - RiskLab Switzerland will chair an external advisory board composed of industry representatives, regulators and academics.
A global search is underway for the founding director of the forum.
Aug. 3, 2011