Risk management has become an extremely uncertain practice due to financial market complexity and spiralling catastrophe costs, according to KPMG analyst Andries Terblanche.

Speaking in Melbourne at an ANZIIF seminar last week, he said the current international asset meltdown highlights the complexity of risk management.

“Maths cannot cope with the global scenario we have – it stops short,” he said. “Where there is the slightest opportunity for economic arbitrage… you don’t have three countries in the world chasing it, the entire world is racing after it.”

Dr Terblanche says sharp rises in catastrophe claims over the past decade have contributed to the uncertain projections.

Despite those concerns, he told insuranceNEWS.com.au he believes Australian insurers at “the top end of town” are well placed to react.

He says Australia should avoid the worst of the recession due to sound economic management. But he forecast a grim outlook for the US economy, with debt soaring above $US53 trillion ($79 trillion).

“The US is definitely heading for a recession,” Dr Terblanche said. “It the length and depth of it that is in question.”