Timing Risk
Could someone elaborate on the keyword "timing risk"?
The source text says "the timing of the receipt and payment of those cash flows (timing risk)."
However, I do not understand what that means. Thank you!
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Could someone elaborate on the keyword "timing risk"?
The source text says "the timing of the receipt and payment of those cash flows (timing risk)."
However, I do not understand what that means. Thank you!
Comments
I believe timing risks mean you cannot predict when the loss payments will be due, so there is a "risk" as to when you need to pay the claims.
For example, if all loss payments will be due on Dec 31, 2022, this is not timing risk because you know in advance when the claims will need to be paid.
However, if loss payments are due within 90 days of the accident is reported, this is timing risk because we do not know when any particular accident will be reported.
Yes, this answer is correct. Thank you zporiri.
super. thanks guys!