- New business volume risk: too high (exhaust capital) too low (not enough to cover the fixed expense)
- Mix of business, if there is cross subsidy..
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Investment risk
- Market risk: Assets may not deliver required return.
- Credit risk: the issuer of any assets may default
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Cash flow mismatching risk
no cash is received until the policyholder dies so liquidity is needed from elsewhere to pay the annuity. - Liquidity risk: Liquidity risk occurs when an individual investor, business, or financial institution cannot meet its short-term debt obligations. The investor or entity might be unable to convert an asset into cash without giving up capital and income due to a lack of buyers or an inefficient market.
- External risk: Changes in regulation, changes in solvency requirements, tax changes
- Operational risk: Operational risk is the prospect of loss resulting from inadequate or failed procedures , systems or policies. Employee errors. Systems failures. Fraud or other criminal activity. Any event that disrupts business processes.