The long term risk model is the key tool that the PPF uses to understand and quantify the risks facing the PPF in the future, and thereby to help assess the level of resources that are required to meet future potential liabilities.
A bespoke system, the Long Term Risk Model (LTRM), which will enable the PPF to set a more accurate levy, has been unveiled. The LTRM is based on ‘stochastic’ modelling methods which use random numbers and statistical models to simulate the financial impact of different economic events. These methods have been adapted to predict the level of risk faced by the PPF in differing economic situations.
It is hoped that the accuracy the LTRM brings will increase confidence in the levy set by the PPF.
View the Long Term Risk Model paper (PDF 421.96 KB)