Risk evaluation

Mari Gunnerud
Mind Map by Mari Gunnerud, updated more than 1 year ago
Mari Gunnerud
Created by Mari Gunnerud over 5 years ago
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Mind Map on Risk evaluation, created by Mari Gunnerud on 10/11/2014.

Resource summary

Risk evaluation
1 On policy level:
1.1 n incidents during a certain time period
1.1.1 Total loss z = x_1+...+x_n,
1.1.1.1 where x_i denotes the loss of the i-th incident
2 On portfolio level:
2.1 N different claim sizes during a certain time period
2.1.1 Total portfolio loss Z = X_1+...+X_N,
2.1.1.1 where X_i denotes the total loss of the i-th type of claim
3 Compensations will differ according to the type of contract:
3.1 z = actual total replacement value, f(x)= actual compensation of the each loss:
3.1.1 z = f(x_1)+...+f(x_n)
3.1.2 Given the i-th loss x_i, the contract f(x_i) determines the i-th compensation.
3.1.2.1 Can now include the possibility of e.g. only covering losses x_i within a certain range, say [y,y+b], for y,b > 0:
3.1.2.1.1 f(x_i) = 0 if x_i < y
3.1.2.1.1.1 f(x_i) = x_i - y, if y < x_i < y+b
3.1.2.1.1.1.1 f(x_i) = b, if x_i > y+b
3.1.2.1.1.1.1.1 where y denotes a certain deductible
3.1.2.1.1.1.1.1.1 (Reinsurance can be arranged in a similar way)
3.2 The insurance company is not necessarily obliged to cover the whole loss of the policy holder!
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