Practical Risk Theory for Actuaries (Monographs on Statistics and Applied Probability)

"Practical Risk Theory" is designed to be a textbook for practising actuaries and student actuaries on the practical aspects of stochastic modelling of the insurance business. It has its roots in the classical theory of risk but introduces many new elements that are important in managing the insurance business but which are usually ignored in the classical theory. These include modelling the stochastic behaviour of inflation and investments, cyclical effects on both claims and premiums, claaim run-off uncertainty and feed-back mechanisms. The main focus of the book is on general insurance (property/casualty insurance) but there are also chapters in life insurance and pensions. Practical tips are given for the use of simulation to solve both short-term and long-term problems, with many practical applications. The text avoids the use of complex or abstruse mathematical formulations and makes liberal use of diagrams and graphical representations.