Stress scenarios software of the year: Moody's Analytics

The value of stress testing and scenarios became particularly apparent when insurers witnessed the impact of the Covid-19 pandemic on financial markets.

Colin HolmesWith accounting standards such as LDTI and IFRS 17 coming down the line, not to mention climate stress tests for the insurance market, developing solutions to support insurers' stress scenario requirements is becoming ever more crucial.

Moody's Analytics is playing its part to support these trends.

To help insurers during the pandemic, Moody's Analytics provided stress testing scenarios on a deterministic and stochastic basis, enabling insurers to understand the possible recovery scenarios and impacts across global markets.

Moody's Analytics also offers a range of climate pathway calibration services and a stress testing framework to support the use of climate change scenarios and assumptions in real-world projections.

Colin Holmes, General Manager-Insurance at Moody's Analytics, explains that often its customers want to understand the sensitivity of their liabilities to different risk factors. Holmes says: "Moody's Analytics works closely with customers to help them understand the subtleties of modelling and calibration choices and the impact on their liability projections."

The uncertainty of the pandemic's future impact means there is a growing need for stakeholders to understand the drivers behind the changing risks in their business and to track and manage those risks frequently, says Holmes

In this regard, Moody's Analytics offers real-world calibration tools to enable clients to customise the path of market risk variables in order to replicate the desired stress levels.

Features such as this prompted one of InsuranceERM's judging panel to say that Moody's Analytics stress scenarios solutions offer "solid incremental improvements involving the hot topics of the day".

Other judges praised Moody's Analytics "impressive set of client wins and testimonies" when it comes to stress scenario solutions.