What is Risk Exposure?
Risk Exposure The total value or potential for financial loss that an insurer or reinsurer is subject to from insured risks, measured before the effect of risk mitigation or transfer.
Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework
How is “Risk Exposure” Used in Practice?
Under Solvency II, insurers must calculate their aggregate risk exposure to determine regulatory capital requirements.
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Who Needs to Know This Term?
- Financial Analysts
- Bankers
- Traders
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What is Risk Exposure?
The total value or potential for financial loss that an insurer or reinsurer is subject to from insured risks, measured before the effect of risk mitigation or transfer.
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