Glossary

Stress testing refers to a structured process used to evaluate the resilience, performance, or stability of a system, organization, process, or asset under adverse, extreme, or unexpected conditions. It is used to help identify vulnerabilities, assess potential impacts, and determine the ability to withstand and recover from challenging scenarios. For example, stress testing may be used to assess whether an organization's cyber-security controls can withstand a significant increase in attack activity.

Strict liability is a legal doctrine under which liability is imposed upon the party who is found strictly liable for injuries or damages even if that party was not at fault or negligent. It is liability imposed without regard to fault. For example, under strict liability standards, the manufacturer or distributor of a dangerous product is liable to a person who is injured by the product, regardless of the degree of care exercised by the manufacturer or distributor in the production or sale of the product.

A strike-through clause is a reinsurance contract provision requiring a reinsurer to pay its share of a loss directly to the insured in the event that the ceding insurer becomes insolvent.

Insurers may exclude or limit coverage for strikes, riots, and civil commotion (SRCC) perils on policies covering retailers, hotels, and other vulnerable businesses. Such businesses can obtain separate coverage for riot and civil commotion by purchasing a political violence policy.

Strikes, riots, and civil commotion warranty (SR&CC) is an ocean marine coverage provision that excludes damage from strikes, riots, civil commotions, lockouts, vandalism, and sabotage, including terrorist acts and any other acts carried out for political or ideological purposes. Coverage can be added back with an SR&CC endorsement.

Strike coverage is a type of specialty business interruption insurance covering loss resulting from interrupted operations caused by a labor strike.

Within the context of put and call options based on an index, the "strike price" is the price of the option that determines its value (or lack of value) at settlement.vIf a put option's strike price is above the index's settlement value, it is "in the money"—in other words, has value. The opposite is true of call options—that is, if a call option's strike price is below the index's settlement value, it is "in the money." When the strike price and the index's settlement value are the same, this is known as "at the money."

Structural risk modeling methods are based on explicit cause and effect relationships, not simply statistical relationships such as correlations. The cause/effect linkages are typically derived from both data and expert opinion. The principal advantage over statistical methods is the ability to examine the causes driving certain outcomes (e.g., ruin scenarios) and the ability to directly model the effect of different decisions on the outcome.

Structured finance involves a capital management process that typically utilizes a highly structured combination of risk transfer, risk retention, and risk financing. This results in aligning risk profiles to parties most comfortable with the exposure.

A structured settlement refers to a settlement under which the plaintiff agrees to accept a stream of payments in lieu of a lump sum. Structured settlements can be tailored to the individual's need to provide for inflation, anticipated future medical expenses, education costs for children, etc. Annuities are usually used as funding mechanisms.