Good morning, In terms of conduct risk, can we please discuss some specific examples of: - information asymmetries - company strategy (something that is not linked to other risks) - market conditions (something that would not be linked to market risk)
Hi Viki - off the top of my head, how about: Information asymmetries - there is a risk that a company may take undue advantage of the fact that they have greater expertise and knowledge than the customer, e.g. they might not make sufficiently clear to the customer what the downsides of purchasing a particular product are, or at least not in a way which is totally understandable by the target market, or perhaps sufficient attention has not been drawn to the downsides in whatever material has been provided to the customer Company strategy - the risk that the company pursues a very high risk strategy (e.g. setting up a subsidiary in an undeveloped overseas country) which jeopardises the solvency of its existing operations and hence could result in an unfavourable outcome for existing policyholders Market conditions - the risk that the company takes too much advantage of an uncompetitive insurance market and consequently charges much higher prices to its customers than would be considered reasonable Is that the sort of thing that you were after?
