[ 2009 FRM Sample Exam ] Operational and Integrated risk management Q7 management, companies, insurance, economic, capital

Abey

 

7. The standalone economic capital requirements for insurance companies can be broken down into three major risk factors: Credit Risk, Market/ALM Risk and operating and other risks. Analyzing the risk profiles of a life insurer, a P&C insurer and a diversified insurer the highest market/ALM risk would be for

A. Life Insurer

B. P&C insurer

C. Diversified insurer

D. Property insurer

Abey

 

Correct answer is Afficeffice" />

A. Market/ALM risk accounts for 50% of the capital requirement of a life insurer,

B. 44% of the diversified insurer,

C. 37% of the P&C insurer

D. Obviously false, covered under b) P&C insurer

Typically the market risk is highest for a life insurer