This classic textbook covers all aspects of risk theory in a practical way. It builds on from the late R.E. Beard's extremely popular book Risk Theory, but features more emphasis on simulation and modeling and on the use of risk theory as a practical tool. Practical Risk Theory is a textbook for practicing and student actuaries on the practical aspects of stochastic modeling of the insurance business. It has its roots in the classical theory of risk but introduces many new elements that are important in managing the insurance business but are usually ignored in the classical theory. The authors avoid overcomplicated mathematics and provide an abundance of diagrams.
"I recommend this book to anybody who is really interested in extending their knowledge of the mathematical side of insurance. It is well presented and is filled with many practical examples which aid the reader in understanding the underlying processes."
-Dr. Stewart M. Coutts
"This book continues the tradition of cooperation between British and Finnish actuaries and scholars which led to several editions of Risk Theory by Beard et al. The title of the book and of the first part emphasize the practical aspects of risk theory. This goal is to a large extent reached by focusing on problems which occur in practice and by devoting time and efforts in explaining the more theoretical methods which are applied…as a handbook it seems to cover an unusually large number of interesting fields. The general impression of the book is very favorable: it introduces important concepts in a pedagogical manner, it presents a wide spectrum of ideas with modern references fro further study, and it is typographically attractive."
-Scandinavian Acturial Journal
"The book's content and intention are well expressed…"
-Journal of ASA
"…the book uses a very refreshing approach to its methodology…Its mixture of generality and specificity should also render it a model for OR textbooks."
-Journal of Operational Research
"The authors, eminent practitioners are contributing valuably to the education of their younger colleagues."
Content: Foundations of risk theory. Some preliminary ideas. The number of claims. The amount of claims. Calculation of a compound claim d.f.f. Simulation. Applications involving short-term claim fluctuation. Stochastic analysis of insurance business. Inflation. Investment. Claims with an extended time horizon. Premiums. Expenses, taxes, dividends. The insurance process. Applications to long-term processes. Managing uncertainty. Life insurance. Pension schemes. Appendices. Bibliography. Subject index. Author index.