While scientists and politicians do not always agree on the plan for how to fight the corona pandemic, there is consensus on one aspect: the economic crisis we have entered as a result may develop to a scale unprecedented for all of us.
At the beginning of 2020, the coronavirus COVID-19 disrupted the world in a manner that hardly anyone was prepared for. A vast amount of resources is required to get through this phase. For insurance companies, this means facing greater uncertainty regarding the management of financial risks on their balance sheet at a time when they are already dealing with the low interest rate environment and major regulatory changes, such as IFRS 17.
Both the insurance and the pensions sector experience challenging times. A global virus, political segregation, environmental issues and other uncertainties offer new challenges and risks, after years of economic prosperity. The current markets are drawn by economies of scale and specialization.
As with famous movie franchises like Star Wars, The Avengers and James Bond, many risk management professionals have had to wait a few years for the next episode of the Zanders Risk Management Seminar.
Creating a future stress scenario for the yield curve is not easily done. Above all, it is something that has to be done carefully, because it can have negative repercussions for a financial institution.