Risk 07: Low volatility tempts some to gamble

Risk managers warned at this morning’s Risk 07 conference roundtable that declining volatility was causing a push for more risk concentration and aggression.

Participants said that risk managers are under pressure to supplement current strategic risk allocations with extra ‘buffer funds’, providing more capital at a premium rate and allowing investment managers to concentrate further in the same sector (albeit at a higher cost of funds).

Lower volatility in traditional asset classes is causing some risk managers to look to alternative risks, such as weather and catastrophe derivatives, said Raj Singh, chief risk officer at Munich-based insurance

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