Towers Watson report examines life insurers' risk drivers

This chart below, a truncated version of an illustration from a 2014 Towers Watson report, “Achieving Near-Real-Time Risk Monitoring: Risk Appetite Revisited,” represents the sources of enterprise capital model risks that underpin life insurers’ results.

The model allocates the required economic capital based on the aggregate risk distribution back to individual business portfolios and to risk drivers. The rows of the grid (the risk drivers) reflect key risks within the model that could impair a life insurer’s mission through capital depletion. The columns of the grid divide the business into distinct business portfolios, showing how they contribute.