For most people, stability is typically sought after and risk is often shunned away in everyday life. However, if you are in the business of accepting risk, as insurers are, you need to have an alternative approach. Risk is a double-edged sword, with more risk generally equating to a potential for more reward, but also for greater loss.
Consequently, an increase in risk appetite and risk-taking may result in greater losses. The insurance and financial services sector are familiar with this concept and there is a constant tension between growing revenue and market share versus maintaining underwriting discipline within risk appetite. So where does the sweet spot lie?