Kunreuther and Kleindorfer's chapter (this volume) contains some extremely valuable information, analysis, and insight into the present state of the country risk generated by the investment by our multinational corporations in foreign countries. In the process some assumptions are made that are subject to challenge, and some overemphasis is placed on the desirability of the development of empirical actuarial data and its application to premium determination for the insuring of this risk. It should be recognized that throughout the insurance business, with the possible exception of life insurance and broad-spectrum forms of property and casualty insurance such as private passenger automobile and homeowners, the data and actuarial projections for rate making are less than complete. Actuarial practice is as much an art as a science.

One of the elements that enters into that rate-making process is the period of time over which the data have been collected and the increasing reliability that derives as the period of time increases. A case could be made for comparing country risk exposure with catastrophe exposure in that each has the element of high probability of occurrence of loss over the entire portfolio of risks, but a low probability within each individual risk in a given period of time. The probability of loss for each risk increases as the length of time increases in both cases. The probability of the event's happening in any given time span also increases as a larger segment of the total portfolio of risks of that class is included in the expectancy field.