The Games We Play: the Future of DFA Models’ Interfaces
Aleksey Popelyukhin, Ph.D.
Vice President, Information Systems & Technology aleksey@2wrs.com
2 W INGS R ISK S ERVICES

Dynamic Financial Analysis



 but
Studies the company as a whole
Takes into account multiple types of risk
Compares results of different strategies
Generates distribution of possible outcomes
1

Dynamic Financial Analysis is it really Dynamic
?
2

Now that you have your distribution
905
920
935
860
875
890
800
815
830
845
950
965
980
995 questions arise
3

How did I get there?
 staying profitable
 being not so profitable
 making all sorts of mistakes
800
825
850
875
900
925
950
975
1000 time
3a

Why didn’t I react?
 at that point in time
 at that point in time
 at that point in time
800
825
850
875
900
925
950
975
1000 time
3b

What could I do?
800
825
850
875
900
925
950
975
1000
 how to avoid getting into “red zone”
 what levers do I have
 which scenarios require actions time
3b

Non-dynamic DFA

Doesn’t allow analysis of particular scenarios or group of scenarios

Doesn’t allow time-variant strategies

Doesn’t’ allow scenario-dependent strategies
In short,
All decisions has to be made before simulations.
4

DFA can be enhanced
If one adds:





Ability to run particular scenario (s)
Higher level of details
Clearly identified “ levers ”
Time animation
Ability to define strategy “ on-the-fly ”
(as a response to scenario behavior)
4a

Should we start from scratch?
We need a computing environment that provides:

High level of details

Time animation

Interactivity
5

Welcome to the world of Games !
5

Simulation Games
Provide a computing environment with:

High level of details

Time animation

Interactivity
6

Similarity is striking!
Empire/City/Railroad Building game vs.
Insurance Company management simulation:



Visual Metaphor
Functional Metaphor
“Gameplay”
7

Visual Metaphor

Zoning Areas

Bulldozing Cost

Tall Buildings

Cultural Influence

Natural Disasters
(fires, earthquakes)
 etc.

Lines of Business

Brokerage Fees

Large Losses

A.M. Best Rating

Natural Disasters
(fires, earthquakes)

…
7a

Functional Metaphor

Emperor/Mayor

Advisors

Progress Monitoring

Orders

Taxes
 etc.

Decision Maker

CFO/Actuaries/Claims

Reporting

Actions

Taxes

…
7b

“Gameplay”

Watch Critical Indicators

Check Advisors Reports

Make Decisions

Intervene

Observe Effect in “real” time
 repeat
7c

Benefits
“ Game-like ” computing environment serves as:





Training ground for Executives
Fine-Tuning tool for Strategists
Self-Learning program for AI
Monitoring paradise for Management
Modeling Sandbox for Actuaries
8

Training

Thinking with Images

Making Decisions without any Damage

Behavior in case of Disaster
8a

Fine-Tuning

Choosing Success Criteria

Refining Strategies Definitions (if..then)

Business Processes

Assumption Testing
8b

Monitoring

Multiple factors at once

“Real” time

Visual cues
8c

Dynamic Response

Time is visualized

Non-linear strategies

Feedback

Reserves

Prices

Investment
8c

Implementation
Starting with the existing game Engine
 we will get:


Rich Interactive Interface
Flexible Modeling Environment
 we will not get:


Industry specific Models
Ability to import and constantly update Data
9

Engine Modifications




Simulate Economy
Simulate Company
Simulate Correlations
Simulate the rest:




Competition
Geography
Weather
Catastrophes 9a

Monitoring
Even if we were able to:

Design new Models


Collect necessary Data
Implement all Algorithms
We still have to decide:

Which statistics to calculate


Which indicators to monitor
Which criteria to use for alerts
9b

Presentation of Analysis Results to the Management of the Company built-in!
10

Conclusion
Inevitably, DFA interfaces will resemble modern simulation game environments.
Everyone will benefit:




Actuaries
Management
Shareholders
Policyholders end

Real-life examples
1. Spatial visualization:
P.S.

Real-life examples
2. Time animation:
P.S.

Real-life examples
3. First Actuarial Game:
P.S.