The "C Risk" System of Categorizing Risks and Its Possible Applicability to the Property and Casualty Industry

The purpose of this paper is to briefly describe a system of categorizing the risks to which an insurance company is exposed. The categories have become widely accepted in the life insurance industry. It is not the purpose of this paper to recommend that this system be applied to the property and casualty industry. The purpose is to make casualty actuaries aware of the existence and wide acceptance of these categories. This system should be of interest to casualty actuaries because an enumeration of the risks to which a company is exposed can lead to an increased awareness of risk, sounder business decisions and a better managed company. Also, as a risk categorization system becomes more widely known, there may be a tendency on the part of regulators, rating agencies, creditors, and investors to extend these principles to the property and casualty industry. Consequently, it is critical that any system categorizing risk endorsed by the CAS has proven usefulness to the property & casualty industry. It is hoped that this paper will stimulate interest by casualty actuaries in creating a system of categorizing risk that is appropriate to the property & casualty industry.