Panel debate amongst CROs from some of the big insurers and the FSA. Main points:

• Summarised the current crisis as "A collective failure of imagination over the scenarios of what is possible by risk managers and regulators"
• Insurers are doing better than the banks in the current crisis, and this is due to learning from the bad experience insurers had in 2002 following the collapse of the dot com bubble.
• Quants are not to blame for the current crisis – they are involved but the current liquidity crisis is not a quant issue (Comment: but surely the collapse in asset prices from poor modelling is what led to the collapse in confidence and onwards to the liquidity crisis)

Joachim Oeschlin, CRO of Munich Re said that at a recent panel event he asked a group of risk managers what had been the failings of risk management, was it:

• Risk managers enjoyed the credit party like everyone else?

• Risk managers did not see the bubble coming?

• Risk managers did not have enough power?

The response from the risk managers was the latter (unsurprisingly!) but he favours the first two explanations above. Joachim said that Munich Re had been looking at how their company performed in the Great Depression of the 1930s. It seems that we should be thankful that we have personal bankruptcy laws these days, as one thing he noted was a great increase in suicides in the 1930s as people who owed too much money simply killed themselves…maybe we haven't got it so bad after all. Crisis? What crisis?