As risk management philosophies within financial institutions continue to grow in sophistication, companies are finding that the traditional statutory or GAAP based definitions of reserves and capital are inadequate. This session provides an introduction to economic reserve and economic capital measures that better reflect underlying risks and consequently are more meaningful tools for company management.

Panelists discuss theoretical and practical aspects of identifying and measuring risks and risk diversification. Management strategies such as top-down and bottom-up identification of economic capital requirements are reviewed. The rating agency perspective on economic capital is also considered by the panelists.

At the end of this session, you will have a basic understanding of the theoretical and practical aspects of economic reserves and economic capital.