Life crisis

As the financial crisis continues, companies are being forced to consider their operational risk requirements - a process with wide-ranging implications for insurers and where they can learn from banks' experience with Basel II. Clive Davidson reports

One of the major lessons of the financial crisis has been the demonstration of the degree to which risks are connected, especially under stress conditions. American International Group (AIG) is a case in point: the US Federal Reserve was forced to make an $85 billion bail-out because the company had run into trouble through market losses on its derivatives positions, causing systemic credit risk, and where the derivatives losses had their origins in operational risks in the subprime mortgage