Lessons Learned from the Financial Crisis for Risk Management: Contrasting Developments in Insurance and Banking*

The article analyses implications for risk management in insurance arising from the current financial crisis. After a brief comparison of the insurance to the banking world, we discuss the root causes of the current financial crisis with a particular focus on risk management and incentives. Against the backdrop of this discussion, lessons are derived from an insurance risk management point of view. In particular, the article pleads for a pronounced external and forward-looking approach to supplement the traditional methodology, which tends to be more inward-looking and ultimately backward-oriented.