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April 27, 2023 at 04:20 PM
What You Need to Know
- Alla Gil says life insurers have traditionally focused on bad outcomes that occur more or less independently.
- In the investment world, Gil says, one big problem brings its friends along.
- Gil says life insurers need to use different kinds of math to understand how different kinds of risk can team up to pound their assets.
Alla Gil wants life insurers to think about the possibility that, when bad times come, threats might work together to take financial terror to a horrible new level.
Gil is the founder and CEO of Straterix, a Teaneck, New Jersey-based company that sells high-tech systems for generating a wide array of possible economic scenarios, including scenarios that go beyond executives’ worst nightmares, for use in stress testing.
In life insurance, she said, a typical graph of risk frequency might look like a bell-shaped curve, with many ordinary outcomes in the middle, a few very good or very bad outcomes on the sides, and all of the outcomes shown on the bell-shaped curve occurring more or less separately from one another.
On the asset investment side, she said, “There is no independence.”
What It Means
On the worst days, when troubles come at the insurers behind your clients’ life insurance policies, disability insurance policies and annuity contracts, they might come in groups.
Alla Gil
Gil studied math at Voronezh State University, and worked as a risk management specialist at the managing director level and partner level at Citigroup, Nomura International and Goldman Sachs from 1997 through 2009.
While at those companies, she helped big investment banks apply the same kinds of modern mathematical techniques that physicists and theoretical computer scientists use to their credit derivatives.
She spent two years at a financial technology firm, then started her own consulting firm to help the investment banks’ financial institution clients apply modern mathematical techniques to analyze their investment risk.
She helped launch Straterix in 2015.
The Math of Doom
Gil acknowledged last week in an interview that life insurers have no shortage of mathematical expertise.
