PINS S7.1 What is concentration risk?

(1) Concentration risk is the risk of over-reliance on, or excessive exposure to, a type of risk, counterparty, asset class, industry or region as a result of credit, balance sheet and market, reserving, insurance, reinsurance, operational and group risks.
(2) Concentration risk results from risk exposures with a loss potential that is large enough to threaten the solvency position of an insurer.
(3) An insurer's exposure to risks should not result in a concentration of risks that could result in losses so large as to threaten its solvency position.
Inserted by QFCRA RM/2013-1 (as from 1st January 2015).