Enterprise Driven Investing (EDI) for Insurers V2.0 – Active Customization (AC)

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Management of insurance company investment portfolios has become a task of extraordinary complexity.   The goal of this paper is to elevate and answer two process questions.  One is how to configure the interface of expanding business requirements, which we call enterprise customization, with portfolio design.  A second and related challenge is determining how and when to increase or reduce customization intensity based on its relationship with projected portfolio risk and return. Customization strategy has a highly levered impact on asset allocation. We assert that managing customization effectively has importance to enterprise performance second only to meeting customer expectations profitably.  Our concept of “Active Customization” addresses the shortcomings in conventional and more passive approaches, which can include obscured pricing, dormant leverage, bias, narrow scope, and less than adequate coordination.  Firms employing Active Customization benefit from emphasizing strong team dynamics, judgment informed by “build-to-suit” quantitative measures, transparency, and interactive visualization. 


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