Know your correlation: An interactive game

Publication Year: 2024

Access: Open

Link: https://zenodo.org/records/12532855, https://doi.org/10.5281/zenodo.12532855

Author(s):

Organisation(s)/Authors:

Description:

Summary of activity: A dice-rolling game, simulating 6 causes of loss (i.e. possible hazards) and how dependency affects the chance of loss exceeding a threshold. Why is the training important: In short, because diversification is the basis of all (re)insurance, and correlation (a.k.a. dependency) destroys diversification. So, it’s fundamental. If we get dependency wrong, we mis-estimate risk, mis-price risk etc ….

Technical Considerations:

Key Words:

Insurance, Risk correlation, Natural hazard Dependency, Co-occurring hazards, Compound risk