RiskRunners

Compilation of Actuarial code and Related documents

Two highlights are the Python Scripts for:

• Custom Distribution Sampling --> Exposure Simulation
• Stock Portfolio Covariance --> How Much to Weight Each Stock!

Assumptions / Expectations (2024-02-25)

Lifecycle Exposure Management

1. Mitigating risks DURING a lifetime is akin to Health Insurance
2. Mitigating risks BEFORE and AFTER a lifetime is akin to Property and Casualty Insurance

Premium = Rate x Exposure

• Rate is the financial mathematics aspect of actuarial science
  • Financial Instruments are designed to get folks involved with spreading out the risks
• Exposure is the probability aspect of actuarial science
  • Simulation and Sensors are used to model the "forensics" of processes and materials to contribute to the multivariate equation of indemnification

PFMEA --> Underwriting Cycle

• Process Failure Modes and Effects Analysis (PFMEA) is a methodology for looking at the points of failure and bottlenecks in a process so as to trace back what went wrong or prevent things from going wrong in the future
• The Underwriting Cycle starts from Execess and Surplus (E&S) and ends in the primary insurance lines
  1. When public awareness spreads (tracked by breadth and depth of hashtag awareness) about a risk factor, this spawns the requests for E&S to indemnify something not yet modeled
  2. "Sherlocks" are sent out to model the exposures
     • 2.1 Managerial Influence is kept in consideration
  3. Financial Instruments are designed to incentivize folks to spread out the risks
  4. Given enough involvement, the New Policy line will exit E&S and enter maintstream insurance

Process and Material Flow

• Bill of Process (BOP) is a document that is used in Product Lifecyle Management software (e.g. Teamcenter, Windchill) - along with Bill of Material - to throttle the butterfly effect of change management
  • Tim may be working on a part
  • The PLM tool will simulate stress on the part with ISO/IEEE standards
  • THe PLM tool will notify Jamal that Tim's part will impact Jamal's part under potential stress on the system
    • If Tim changes the material of a bolt to copper, and the bolt heats up, the bolt could break the nut that Jamal is working on

Predicate Calculus: Time Allocation (Basis)

• When converting reality into predicate calculus, so as to inform simulation, Time can be the allocation basis
  • Philosopher's DIning Problem
  • Process Flow Simulation
    • Supply Chain
      • e.g. Reuptake in the fashion industry
    • Shop Floor
    • Consumer Behavior
      • e.g. to socialize taste
• Traceablity on transactions, events, and opportunities is key to determining:
  1. If someone will pay back their debt
  2. The expected indirect costs when working with someone

Determining if someone will pay back their debt

• Collecting demographics through the Census allows anyone to use these differentiators when determing this
• The secondary market may use ANY variable when bundling and re-selling assets
  • although, the primary market may not

Simulation and Sensors

• Parametric Insurance can be explained by the example of Earthquake Insurance:
  • A grid is drawn over San Diego and Tijuana
  • Seismic Reading Sensors are spread throughout
  • When the seismic reading is above a threshhold set by the market, insurance is automatically paid off
    • this is only possible when the process is void of managerial influence
  • Think about it: would the threshhold be higher or lower in San Diego than in Tijuana, if there is more money in the market in San Diego?
    • Akin to Airports being built in low income communities...

Historical Context (2019-12-31)

Natural Language Business Rule Processing

• Scraping Yelp pages for Hotel / Motel
• Synonymize the natural language of the indemnifications
  • e.g. No Alcohol on Premises
• Anomaly Detection and Notification
  • e.g. Someone mentions "I had a great Mom-mosa"
• Determine if folks are adhering to their policy or understand exposures before insuring

The 9 Commandments of AI

1. thou shalt not pose false kpi

2. thou shalt not use AR for facial recognition

3. thou shalt not socialize genetic information

4. thou shalt not use pride of ownership for credit scores

5. thou shalt not leverage sound bites to further the legitimacy of institutions

6. thou shalt not use medical malpractice precedence when adjudicating influencer impact

7. thou shalt not let greed blind from the fallacies that persist in Information Management Systems

8. thou shalt not use demographic data in secondary markets to determine if people will pay back their debt

9. thou shalt not use futures contracts to guarantee intention per negligence unless there is no managerial influence