New private public consortium aims to develop protection against systemic risk

The Cambridge Centre for Risk Studies (CCRS) at the University of Cambridge Judge Business School is launching a new research consortium on protecting society from future systemic risks. Funded by by an international consortium of companies including Pool Re, the research will aim to support the creation and extension of private-public market institutions and develop new risk transfer products and advisory services.

The new products could include: extensions of coverage terms for traditional insurance lines of business; new types of insurance indemnification or risk sharing products; structured parametric bonds; corporate pools; bi-party swaps, and other financial instruments. It will cover topics such as pandemics, cyber threats, geopolitical change, financial crisis, and climate change.

Dr Michelle Tuveson, executive director and chairman of the advisory board at CCRS, said: “We are honoured to be leading this private sector consortium – their guidance in steering our research will be invaluable as we create new private market risk management products and services together.”

Julian Enoizi, chief executive officer of Pool Re, and chairman of the industry consortium, added: “The Covid-19 pandemic triggered the deepest economic recession in our lifetime. Our policies, preparedness and financial responses require a significant overhaul if we are to better equip and protect society from the next major systemic risk that threatens our way of life. The insurance industry is committed to coordinating and collaborating with the wider communities, and I am honoured to partner Pool Re Solutions with the Cambridge Centre for Risk Studies, who bring deep academic rigour to this new and expanding consortium.”

The team behind the research says that it will enable exploratory design of new financial instruments and evaluate their benefit, both in terms of return on underwriting capital, but also in the potential consumer protection and societal benefits. It hopes that the results will better enable members to collaborate with national and international public bodies in risk reduction policymaking.

Dr Andrew Coburn, chief scientist at CCRS, said, “Systemic resilience needs the foresight of systemic backstops to which capital markets can respond. Modelling to support new financial instruments will be critical in addressing future crises.”

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