Presenter: Jakob Bloch Thomsen, AU

Title: A dynamic premium calculation principle for unknown tail risk

Abstract: We present a methodology for pricing insurance products in the presence of ambiguity about the underlying claim distribution. Specifically, we consider the case where the data may originate from either a gamma or a log-normal distribution, with unknown parameters in both models. While these distributions share many similarities, they differ substantially in their tail behaviour. Unlike traditional binary approaches, our method allows for a mixture of premiums based on the estimated likelihood of each model. By weighting the gamma and log-normal premiums according to their posterior probabilities, we reduce the risk of misclassification and achieve a smoother, more continuous transition in pricing. To further limit misclassification, we introduce a compression mechanism that increases the confidence threshold required to fully commit to either model, thereby enhancing pricing robustness under model uncertainty.

Presenter: Jonas Nygaard Eriksen, AU

Title: Biodiversity risk and financial flexibility

Abstract: Firms that rely on ecosystem services face significant financial risk from biodiversity loss and preservation policies. We study how firms adjust financial flexibility to biodiversity-related risks using disclosure-based biodiversity measures. Exposed firms increase cash holdings and reduce long-term debt, consistent with precautionary behavior. Exploiting the 2021 Kunming Declaration in a difference-in-differences design, we show that these adjustments intensify post-Kunming. Effects are most pronounced among firms with negatively worded biodiversity disclosures that have volatile cash flows, are financially constrained, and have low climate risk exposure. Our findings are robust across alternative biodiversity risk measures, emphasizing the importance of biodiversity in corporate decision-making.

PhD presentation as part of mandatory 1st or 3rd year presentation. The time is extended to one hour; the presenter has 40 minutes for the presentation, 5-10 minutes for the discussant, and 5-10 minutes for questions.

Organizers: Stefan Hirth and Anders Merrild Posselt