mature soft Company and Strategy modeling To estimate the impacts that the scenarios have on an insurance company, the company's business practices needed to be quantified and linked to the scenario factors such as interest rate and underwriting cycles. Types of Models Cash Flow Oriented Model: Such model tries to imitate the cash flows of the insurance company's assets and liabilities. Also it assess the impacts on the company's financial statement. Advantages: It might not be difficult to project cash flows linked to economic factors for the company's assets. Disadvantages: Liabilities are often unknown for an insurance company, and thus it is hard to generate outgoing cash flows for claims. Simple Model: Such model only account for part of the economic factors of the scenarios Advantages: The model is mathematically tractable, and accuracy can be achieved. Disadvantages: It defeats the purpose of implementing a DFA, which is to analyze potential impacts that changes in economic factors can have on the insurance company's financial performance. Complex Model: Such model not only tries to account for all the economic factors that the scenarios generate, but also the dependencies among the company's lines of business. It involves sophisticated mathematical models and parameter to achieve its goal. Advantages: This approach helps executives truly understand the dependencies among its business models and the external impacts on the company's profitability. Disadvantages: Such model is very unlikely to be mathematically tractable. In other words, the model can be totally wrong because no one may know the exact dependencies among the business models and the impacts that economic risks can pose to the company. Analysis and presentation Without effective analysis and presentation, managers can hardly make any sense out of the vast amount of data that DFA produces. The goal of DFA is to help the managers to find out whether the company's current strategies are in line with its financial goals. Below are some tricks of conducting and presenting DFA analysis. Keep communication concise and focused. Eliminate, if needed, part of the DFA's outputs that are irrelevant to the company's financial objectives. Include no more than four most important results in a brief executive summary, and support your statements with graphs and exhibits in the appendix. Focus on business development trend, as opposed to over emphasis on specific numbers or the details of the model. Keep in mind that DFA is only an estimate of what might