Principles for Doing Business at Lloyd's
Principle 2: Catastrophe Exposure (2a natural, 2b non-natural) – Principles for Doing Business at Lloyd's

Principles for Doing Business at Lloyd's P2.6: 2.6 Risk-based validation of the catastrophe view of risk

The catastrophe view of risk is validated on a risk basis. Baseline: validation of external or internal models as Solvency II requires, with a documented validation process; for non-natural perils also back-testing against claims, validation against emerging risks and changes in the risk landscape, and sensitivity testing of key assumptions. Higher levels add consideration of alternative models and assumptions, understanding of uncertainty, a model change programme driven by validation, and validation feedback into pricing, reserving and risk management.

Maintained by Gerard Blokdyk

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