Sensitivity analysis helps insurance companies minimize financial risks in dynamic markets.
Companies in the insurance sector face various financial risks, such as market, credit, and liquidity risks. To manage these risks, a common method called sensitivity analysis is used. This method helps assess how changes in different factors can impact the financial results of insurance companies. By setting limits on risks and monitoring exposure, companies can minimize potential negative effects on their finances. In a practical example with a Slovak insurance company, sensitivity analysis was used to evaluate and understand financial risks in the insurance sector.