Am I correct in pointing out that this subject does not explicitly consider the mitigation of individual risks as is common with most Actuarial subjects but rather their identification and quantification. In terms of Risk Mitigation, I see the subject rather focuses on financial instruments that can do this via the hedging chapter?
Exactly the reason why I asked this question April 2007 question 2 (iv) asks of controlling liquidity risk and say the answer is to be able to predict it? Which is half a solution....but I understand since the work covers no mitigation of risks. But I am disappointed to see the realise on CR inspiring us to say 'we have limited answers' when we don't... I had a few points including;- 1) Contingent funding 2) Emergency overdraft 3) AL Matching trying to match the nature, timing and size of cash flows - long term solution not applicable for a severe crisis 4) Minimise credit risk - another Long term solution 5) Bank Loan for a short term solution 6) Issue new business and get premiums to finance cashflows 7) Can even issue debt if problems are severe and expected to recur in the future I thought it was not necessary to distinguish between a temporary solution to a crisis and a long-term BAU control of liquidity risk....Any takers?
