Risk Management Meets Open Source

For understanding or interpreting a text, I don't need to know how Word is implemented. But the situation is different for an insurance company's sensitive figures, e.g. reserves or risk capital, which are produced by a risk analysis tool. Such figures are almost meaningless without information on how they were produced. I hope that most would agree with this statement - CROs, auditors, regulators.

Many companies write text documents to ensure the transparency of their approach and figures; that's fine and needed, but can it guarantee that the figures were really produced as described? Most likely not if the figures are produced, at least in part, with black-box, proprietary software. Typically, the only promise a user has are vendor statements such as "we have the best algorithm for ..." or "a state of the art implementation of ..."  - no chance to verify these claims. Auditors disclaimers are well-known and, sadly enough, justified.

Other companies develop everything themselves to ensure access to the complete information. The economic reality is bleak: It is very expensive. Most of the risk infrastructure to run company specific models is generic. It is not only economic nonsense to develop this several times, it also raises questions concerning the core competence of an insurance company. Should an insurance company develop and maintain generic risk infrastructure software?

From the above arguments it is evident that the insurance industry as a whole benefits greatly from a professional, open source risk analytics platform. This is what PillarOne is all about: An enterprise strength risk analytics platform.

Join us to shape the platform’s future.

--Markus Stricker