Advantages provided by large portfolio sizes in respect of random fluctuations risk justify, to some extent, the traditional deterministic approach to mortality in life insurance calculations. However, the presence of other mortality risk components should be recognized. In particular, risks due to uncertainty in level as well as in trend of future mortality may heavily affect portfolio results. Special attention should be placed when addressing long-term insurance products, for example life annuities. Enterprise Risk Management can provide sound guidelines when dealing with mortality and longevity risks. Various steps constitute the risk management process, ranging from risk identi cation and risk assessment to portfolio strategies, such as product design, appropriate pricing, natural hedging, risk transfers and capital allocation.
To read this paper, please contact the Society at email@example.com