The insurance industry can do more to employ scenario analysis to assess future risks rather than making forecasts strongly rooted in current conditions, according to a new Swiss Re sigma study.
Called "Scenario Analysis in Insurance," the sigma study defines scenario analysis as a process that "facilitates business decisions by taking into account a number of potential developments and possible future events in the business environment."
The study added that scenario analysis is used to analyze the outcome of "highly uncertain events and their impact on an organization's profitability or competitive position."
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