CPIF with uncertainty bands Annual percentage change 4  4  90% 75% 50% Outcome Forecast  3  3  2  2  1  1  0  0 05  06  07  08  09  10  11  12  13  14  Sources: Statistics Sweden and the Riksbank  Figure 6. Forecasting performance for GDP and CPI 1-RMSE/SD, number of quarters ahead in time 1  1 GDP CPI  0.8  0.8  0.6  0.6  0.4  0.4  0.2  0.2  0  0 1  2  3  4  5  6  7  8  9  10  11  12  Note. Prior to the vertical line, the forecasts partly contain outcomes. Sources: The Riksbank and own calculations  BIS central bankers’ speeches  13  Figure 7. Forecasting performance for GDP, CPI and unemployment 1-RMSE/SD, number of quarters ahead in time 1  1 GDP CPI Unemployment  0.8  0.8  0.6  0.6  0.4  0.4  0.2  0.2  0  0 1  2  3  4  5  6  7  8  9  10  11  12  Note. Prior to the vertical line, the forecasts partly contain outcomes. Sources: The Riksbank and own calculations  Figure 8.
For example, more standard risks can be insured in the traditional market while more specific and bespoke risks can be tailored and underwritten by the captive. The benefits go both ways. Captives can, and should, also contribute significantly to the development of the industries they serve. Insuring with captives enables businesses and economies to better weather insurance market cycles. Especially for smaller and mid-sized companies, captives can be a powerful catalyst for more mature risk management practices and culture. This comes from putting control of a company’s insurance needs in its own hands and encouraging a longer-term and more sophisticated view of risk. The effects also accrue to the wider insurance industry. The captive can act as a ‘risk incubator’ by recording and accumulating data and information about lesser known risks. In time, this will promote conditions for the development of new products and markets as businesses and solution providers continuously seek out more efficient ways to manage risks. Future trends – opportunities and changing norms for captives What the future holds for captives. Three trends are worth noting. First, captives are poised to move beyond the predominant focus on the single parent-captive 2/4  BIS central bankers' speeches  model and the exclusive domain of large corporates. In fact, many non-profits entities in the US, and an increasing number of SMEs are accessing captives via group captive models that pool assets and share risks across its members. Parallels can be drawn with the mutual, which also shares similarities to takaful (Islamic insurance).