concluded last week. The course was given by the Columbia Consortium for Risk Management (CCRM), which is a division of the Columbia Earth Institute of New York's Columbia University. The topic was derivative investment instruments.

Unlike the majority of conferences and training seminars offered in Bermuda, this course was sponsored by the companies whose employees attended it. ACE Insurance Company Ltd., Centre Insurance Group, LaSalle Re Ltd. and Renaissance Reinsurance Ltd. were the Bermuda sponsors.

The genesis of the series of courses -- last week's was the first; the next will be held in July -- was a series of visits to Bermuda some years ago by course instructor Dr. Christopher Barton of CCRM.

"I had become familiar with the reinsurance industry in Bermuda through the Biological Station's risk prediction initiative,'' Dr. Barton explained.

"Columbia saw the potential for developing a parallel effort to look at financial risk. Starting last September, we began to bring together the academics and researchers working on theories of emerging risks, such as climate-related risk.'' Changes in the structure of markets are driving insurance companies and banks into more broadly similar fields of operation. The process is known as convergence. As a result, insurers need an ever-wider understanding of the nature of risk and the ability to identify new risks.

Bermudian actuary Nick Campbell of Centre Solutions, who attended the course, explained: "Local reinsurance companies are changing and diversifying their focus into the capital markets,'' he said. "This, in turn, creates a requirement for people to have a greater understanding of how those markets work.'' Mr. Campbell added: "Centre is branching out into credit enhancement and other structured financial products,'' the area in which he works.

Dr. Barton said that the course sponsors selected the topics for this course, and that derivatives had been the main focus. Derivatives, course instructor Dr. Suresh Sundaresan explained, are financial instruments whose value depends on the value of an underlying asset or assets.

Futures, options, forward contracts and swaps are examples of derivatives. The parties to a futures contract, for example, are forecasting the value of the underlying asset, such as a currency, at some future moment. The value of the future contract depends to a very large extent on the value, in this example, of the underlying currency.

Derivative instruments are used by financial managers to protect capital, as course attendee Jazmin Raynor, a Bermudian who works as a treasury analyst at Ace Ltd., explained.

"From a holding company perspective, we always have to manage the risks inherent in our capital structure,'' she said.

"What we have learned here this week will be very useful going forward.'' Dr.

Barton explained that, because the sponsors set the agenda for these courses, it is possible for CCRM to provide a "very focussed, tailored outlook''. He revealed that CCRM is in "the very early stages of discussions'' with Bermuda College over possible joint approaches.

Dr. Barton said he was "very impressed'' with the way the reinsurance sector has continued to attract Bermudians.

"In the five years I have been coming down here, I see a dramatic increase in the number of Bermudians employed in reinsurance,'' he said.

But of course! (From left) Jazmin Raynor, Dr. Christopher Barton and Nick Campbell in the "classroom'' at Centre on Pitts Bay Road in which the Columbia Consortium for Risk Management this week held its executive seminar on derivative financial instruments.

BUSINESS BUC