Lecture 13 Examine the convergent that is currently occurring between finance and insurance Identify and discuss some of the newer types insurance programs that are designed to address the firm's broader risk transfer needs. Briefly explore enterprise risk management and discuss what lies ahead for the risk manager of the future. None Before we hear from the consulting teams, let's spend a few minutes on alternative risk financing and enterprise risk management. Convergence in the Capital Markets One of the interesting phenomena that is occurring today is the convergence of the traditional areas of finance and insurance.
Insurance companies are financial intermediaries that provide capital to the capital markets.
While the insurance and finance markets still appear distinct from one another, the removal of the barriers between these entities has created several new types of financial products. Given the need for income and growth, the players start to pursue opportunities outside of their traditional place in the marketplace. Another example is a catastrophe bonds or cat bonds. As their name implies, catastrophe bonds perform in the event of a natural disaster such as an earthquake or hurricane. By perform, we mean that it makes funds available to the insurer at that point in time.