PillarOne

Risk Management meets Open Source

Preparations for a risk-management platform as an open-source project for the insurance community are now beginning in cooperation with our partners, Intuitive Collaboration.

"The participation age is about people at the edges of the network telling the centre what is going on." Markus Stricker of Intuitive Collaboration used this quote from Jonathan Schwartz (CEO Sun Microsystems) to explain how an open-source project can be successfully carried out. With this aim in mind, Munich Re, as sponsor and initiator of the PillarOne Project, organised an initial workshop for risk managers, actuarial consultants, supervisors and specialists at the end of November 2007.

The objective of PillarOne is to create a platform for the simulation and calculation of risk models for treaties, portfolios and organisations. With the start-up financing from Munich Re in place, the community of risk managers and actuaries can now introduce and make use of their own contributions in the context of the QIS4 study. The workshop outlined the initial specification requirements for future software: allocation of risk capital via a best-estimate of reserves based on valid methodology and an aggregation model.

Markus Stricker considers flexibility in handling the commitment from the community to be as important as being consistent in observing the principles of PillarOne:

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  Develop auditable software modules
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  Provide support in the development of internal models
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  Deliver enterprise risk-management functionalities by 2010

These are ambitious goals that can only be achieved if all interested and affected stakeholders work together. As one workshop participant put it: "If we have an open platform for modelling, we can create access to the knowledge of best practices and at the same time drastically reduce development costs."