Small-to-medium-sized businesses (SMEs) risk being left behind in the fight against costly cyberattacks unless they receive more help to bolster their defences. In Cyber Protection Gap Widens for SMEs, Win-Li Toh, Dr Michael Neary and Sarah Wood take a temperature check on cyber risk.

Authored by former APRA deputy chair, insurance company chairman and actuary Ian Laughlin, Fairness in Insurance argues Boards sit in a powerful position to hold management to account on customer fairness at a time of record high complaints about insurance, parliamentary inquiries into the sector, adverse publicity about rising premiums and affordability pressures.

We traditionally quantify climate change risks as a function of the risk determinants of hazard, exposure, and vulnerability. Traditionally, insurers have been concerned with the built environment domain, focussing on assessing the damage to properties and buildings from natural disasters. Many practitioners are extending climate risk assessments to other domains to look at climate risk more holistically, as climate change does not only impact the built environment, but also the social, natural, and economics domains. But there are limitations to only relying on a quantitative assessment as climate change risk is extremely complex and interacts both internally between the determinants of risk, and externally with many other risks. This can lead to cascading and compound events with widespread systemic risk impacts. For example, vulnerabilities in one domain can stem from multiple hazards, leading to exposures in other domains, whilst exposures that change over time can create changing vulnerabilities across domains. Hazard interactions from disasters may cause feedback loops that lead to untenable capacity to support social, economic, natural and built domains. A qualitative risk assessment can help identify deficiencies in quantitative modelling and suggest improvements for future risk assessments. Our methodology for qualitative assessment refers to reports aggregated from community interviews, which involves decision-makers, local officers, emergency response officers, and other stakeholders. The methodology combs through the main conclusions from the reports to form our basis for the interactions between hazard, vulnerability, and exposure under the four domains (built, social, economic, and natural). The confidence of the interaction increases where there are multiple instances of the same interaction being noted across different reports, or sometimes across similar themes within the same report. The output from our qualitative assessment are multiple mapping diagrams that show the interactions captured within the reports within and between domains. We then draw conclusions from the mapping diagrams, which can be then used to supplement the quantitative risk assessment and identify gaps for future assessments.

We model the relation between excess returns, fund size and industry size for active equity funds within four markets – global equities, emerging markets, Australia core and Australia small caps – and use the results to investigate the extent to which funds deviate from estimated capacity. We uncover a significantly negative relation between returns and both fund size and industry size across all markets. The estimated percentage of funds operating above versus below capacity varies both across markets and over time, and in the role played by fund size versus industry size. We find greater prevalence of funds operating significantly below than above capacity, in contrast to findings for US equity mutual funds. Significant deviations from estimated capacity persist for a median of between two and six quarters. Our main contribution is to show that the dynamics governing deviations from capacity for active equity funds vary across markets.

The Institute welcomes the intention of the 2023-2030 Australian Cyber Security Strategy given the prevalence of digital technologies and the importance of protecting Australians and the Australian economy. Our response to the discussion paper provides feedback to select questions.

This Report notes that while the first line of defence against cyber risk will always be good cyber hygiene and security, cyber insurance is an important second line of defence.

The aim of this Green Paper, through a collaboration between the Actuaries Institute and independent economist Michael Blythe, is to share insights about scenario analysis and identify some plausible alternative futures that actuaries could consider as part of their professional work. These alternative futures are likely to be highly relevant for many other professionals and in many industries given the interconnectedness of the economy. These alternatives may result from significant shocks or structural breaks and what may happen as economic theory and policy evolve over time.

The Institute welcomes the opportunity to comment on APRA's draft prudential guides, CPG 190 Financial Contingency Planning (CPG 190) and CPG 900 Resolution Planning (CPG 900). APRA has prepared these guides based on the two proposed draft prudential standards APRA released for consultation in December 2021.

The Actuaries Institute has released its latest Green Paper, Cyber Risk and the Role of Insurance. Australians are more dependent than ever on technology and cyber risk cost the Australian economy $33 billion last financial year. The paper notes while the first line of defence against cyber risk will always be good cyber hygiene and security, cyber insurance is an important second line of defence.

Questions arising from the recent competition compliance training sessions are set out in this document.

This Green Paper explores how big data is transforming the insurance industry and the implications for the cost and availability of insurance

The Institute welcomes APRA’s focus on entities managing severe scenarios that threaten their financial viability (CPS 190) and, in the case of large and complex entities, pre-positioning to minimise the impact of entity failure via resolution planning (CPS 900). These are useful additions to an entity’s overall risk and capital management frameworks. The Institute has identified several areas of potential changes to enhance consistency between APRA’s stated policy intentions and the proposed prudential standards, including: more holistic coverage of superannuation funds, greater clarity of the intersection with the ICAAP, the inclusion of non-financial risks, and timing considerations.

Two actuaries have developed a skill and capability checklist to help Australian bank and insurance companies appoint Directors with the right qualifications to prevent misconduct uncovered by the Hayne Royal Commission. Barry Rafe, a former Actuaries Institute President and experienced director and board advisor, and Ian Laughlin, a former APRA deputy chair, said their Dialogue* paper, The Special Needs of Financial Services Boards, provides a practical toolkit for Board appointments, specifically aimed at bank and insurance companies.

This Dialogue paper by Barry Rafe identifies a serious flaw in Board governance practices in large complex organisations.

This Dialogue paper by Barry Rafe identifies a serious flaw in Board governance practices in large complex organisations.