Risk Management

What are the 4 steps in the risk management process?

  1. Identify Loss Exposure

  2. Measure and Analyze

  3. Select Appropriate Techniques

  4. Implement and Monitor

What is the formula for the combined ratio?

Incurred Losses + Expenses

        Earned Premium

<100% = Insurance company is making a profit


>100% = Insurance company is at an operational loss in terms of underwriting but possibly making up for the loss with investment income