风险管理计划essay代写 risk management programmes

risk management programmes

风险管理计划essay代写 Life insurance - MetLife: Rebuilding the company around product lines is becoming more commonplace among life insurers as

Introduction 风险管理计划essay代写

ERM is a major insurance industry topic but also generally misinterpreted and under-used. It starts to become an increasingly important aspect of insurance businesses' continuous operations due to key macro drivers such as a heavy stream of incoming regulation, market volatility, a tough global macroeconomic climate, and a plethora of disruptive forces on the horizon, according to Than (2019). A stronger and more comprehensive approach to risk control can help insurers extract substantial stored wealth in the face of low interest rates and volatile markets, stated by Holsboer (2000).

An enterprise-wide approach to risk management (ERM) can help insurers save money and time in the long run by allowing them to focus on their core business and relevant risks rather than focusing on compliance with regulations. To put it another way, there are three primary benefits of ERM: 1) Strategic power - the capacity to mitigate risk and perform more profitable business; 2) New Vision – Insurer need to adopt new technology due to the enormous data that they have to analyse c) Controlling operational risk to improve insurers' resilience and efficiency.

However, some insurers also incur the danger of not effectively implementing ERM, which may be extremely devastating to their businesses. There must be planning, integration, change of organizational culture and the proper personnel in place if ERM is to be successful.

In this report, we will address the relevance and constraints of the insurance sector. As well as assess the industry's evolving demands and ERM trends. It stressed the relevance of risk management systems in the insurance sector and the importance of developing risk-based business models. The final section of the report recognizes the value that insurance may generate by implementing an ERM programme.

Overview of Insurance Industry 风险管理计划essay代写

Understanding the operational environment, core activities, relevance. And constraints of the insurance business is essential to our assessment of insurer risk management frameworks. In this part, it will provide an overview of the insurance market.

Core Activities

Risk management is offered in the form of contractual terms by organisations in the insurance sector. If a future occurrence cannot be predicted, an insurance plan guarantees repayment to a third party. The insured. On the other hand, pays a great discount to the insurer in return for the assurance of coverage in the event of an unpredictable future event. Rishel (2021) indicated that products, pricing, underwriting, and distribution—all of which have the ability to set a life insurer apart from its competitors—are among the most core activities of a life insurer.

Because of this, life insurance companies should dedicate most of their resources to these responsibilities. Operations, premium collecting, and claims processing are all "non-core" administrative services that insurance firms have historically performed. They must still be done, but their completion does not generally result in competitive advantage.

Importance of Insurance Industry Products 风险管理计划essay代写

Insurance is a form of financial instrument that helps to mitigate losses caused by a variety of various types of risks. There are some specifics on why and how the insurance industry is essential to the growth of any economy.

Organizations and individuals alike may rely on the products of the insurance sector for safety and support. Cole (2012) stated that people and companies are able to tackle the many risks that come with starting and running a firm with the help of insurance. It's a great way to protect yourself and your organisation against financial disasters that might happen at any time. For example, if a catastrophe, fraud, maritime disasters, or other calamities occur. A company insurance policy provides financial assistance.

Moreover, it offers assistance to families in times of need, such as medical emergencies: Everyone cares about the health of their families. And the health of their loved ones is the most significant issue for most. Medical care is essential for everyone in the family, from the sickest infant to the frailest old parent. If you don't have a plan in place, the rising expenses of medical care and the skyrocketing prices of medications can quickly deplete your funds. It is possible for anybody to have a serious disease at any time. 风险管理计划essay代写

Moreover, the increasing cost of medical care is a major source of worry. An individual's health coverage protects them financially in the event that they are unable to work due to an illness or injury. Also, in the event of a medical emergency. A person covered by health insurance will be provided with financial assistance. Routine medical treatments can cost enough to disrupt a family's well-calculated budgets. But a healthcare plan would protect the family's finances.

Also, a considerable contribution to the economy is made by the insurance industry in terms of generating domestic deposits, which in turn aids economic growth. 风险管理计划essay代写

This was approved in the study of Ward & Zurbruegg (2000). Insurance is a way of turning a person's savings into a profit. In addition to allowing for loss reduction and financial stability. Insurance also encourages trading, all of which lead to long-term development and growth of the economy. As a result, insurance is critical to long-term economic prosperity. Investing in the long-term provides financial security. Premiums paid by millions of insurers finance the insurance industry. This is because these funds have a long-term investment horizon and are invested in long-term infrastructure that are critical to development of a nation, according to Gollier (2015). Big investments in the economy contribute to capital formation, which creates more employment possibilities.

Insurance also makes it possible for the covered to shift the burden of risk from themselves to the insurance company. Insurance is based on the idea of distributing risk across a broad group of people. A vast number of people purchase insurance plans and make monthly payments to their providers. Policyholders' money is pooled and used to cover losses whenever they arise.

Limitation of Insurance Industry Products 风险管理计划essay代写

There are four limitations to the insurance business. Yates (2005) noted that one of the insurance industry's largest limitations is a lack of digital technology or a digital transition that has to be enhanced or created. Internet companies like Facebook, Amazon and Google introduced consumers to highly sophisticated online experiences over the last several years, so they've become accustomed to them. Insurance businesses can no longer ignore the demands of their clients, who constantly expect individualised interactions and an elevated user experience.

While some businesses have been hesitant to embrace the digital revolution. The majority now acknowledge that technology has improved their customer interactions, increased their agility. And sped up their development. It is getting more and more popular to do business on the internet. Customers may also purchase goods online with a much more enhanced experience. In addition to financial services businesses with advisor-provided services. It's clear that this digital transformation isn't cheap. Insurers have a delicate balancing act in moving forward digitized at the lowest feasible cost while both attracting new clients and retaining current ones. Financial services providers need to differentiate themselves from their competitors by providing creative and comprehensive digital experiences cross different channels. 风险管理计划essay代写

Another major limitation is that clients' demands are no longer being met just by traditional insurance products, which are being continually developed (Sogunro & Abiola, 2014).

New business models must be created in collaboration rather than as solitary endeavours. For a long time, the profitability of capital investments was all that insurance firms relied on. It's conceivable that, as a result of the pandemic-induced drop-in interest rates, insurance firms won't be able to generate the gross investment returns they need to be profitable. Underwriting outcomes are now more important than ever before for insurance companies. Increased demand on insurers to perform their underwriting in a clean and sustainable manner as well as to be inventive and establish new business sectors is a result of this.

Thirdly, there is a shortage of business intelligence.

When it comes to marketing, it's frequently claimed that you need to reach out to your ideal customers in a way they want to be reached. Advanced and predictive statistical models may now be used to tackle difficult business issues for insurance businesses. They use data analysis to make educated judgments while safeguarding the confidentiality of particular information. A secure and dependable method of data warehousing is required in this situation. When it is used in conjunction with timely interactions with target customers, business intelligence lends a foreboding air to the highest offer they can provide. 风险管理计划essay代写

Risk management solutions and services are the final constraint. When it comes to assessing risk, risk managers have always relied on the past as a guide. However, this strategy is becoming increasingly ineffective. Natural disasters, for example, are one illustration. In the NatCat area, the yearly Sigma investigations conducted by the Swiss Re Institute reveal that natural disasters brought on by climate change are more likely and more powerful than can be expected from past data (Tschoegl, Below, & Guha-Sapir, 2006). Descriptive solutions will gain importance and go beyond real estate disaster coverages as a result of this.

Changing Risk and Needs

The limits of the of insurance companies are putting growing pressure on its long-standing business models. This era is going to be extremely challenging for many insurers, from strategy to profitability, to data collection and analysis, to risk management, across the board. Most insurance companies used to be very process-oriented and focused mostly on reporting. Insurance companies, however, will need to focus on strengthening their balance sheets, their cash flow and their solvency in the near future. It's also important to handle information in a centralized, integrated framework and develop new methods for assessing risk. Insurers will also have to deal with new technology forces and the complex operational risks.

Insurance companies are under increased stress as a result of a variety of reasons, including government regulation, geographic location, macroeconomics, and the rapid advancement of technology. Many in the insurance business, unlike their banking counterparts, are unfamiliar with some of these trends. Insurers now have to rethink their operations and must be able to anticipate and adapt to increasingly complex and disparate risks. For this, they require a fresh strategy, which is the subject of the following discussion of the ERM framework.

ERM Framework 风险管理计划essay代写

Solvency II in the Europe and its analogues abroad have been the driving force for most of the recent shift toward ERM in insurance. In the face of complex and unpredictable markets. ERM is rapidly being regarded as a source of benefit for companies as they transition from focusing on operational concerns, to complying with laws, to developing a strategic strategy to enterprise risk management and driving superior efficiency, according to Marano & Siri (2017) Executive Risk Management (ERM) encompasses a comprehensive approach to risk management that aims to increase a firm's short and long-term value for all stakeholders.

Since it considers the entire company and all of its interconnected processes, people, and structures, ERM has evolved significantly beyond previous risk management methods. Combining and integrating risk-related aspects, activities, and responsibilities inside a firm, such as risk management plan, procedures and risk infrastructure, is at the heart of effective enterprise risk management.

Rather than having several risk managers presenting to different parts of the board of directors, the chief risk officer receives all of this information in one place (see figure 2). With an ERM framework ingrained in the company, insurance companies of any size may guarantee that their risk profile is matched with their appetite for risk and expectations of return. The ability to recognise, defend, preserve, and generate value may be achieved by proactive monitoring and assessment of possible emergent hazards and their exploitation or mitigation.

Traditional ERM Framework: segregated reporting lines and no involvement at the board level

Figure 1

ERM Framework: consolidation of reporting and engagement of the CRO to report directly to the CEO

Figure2 风险管理计划essay代写

The Benefits of ERM in Insurance

ERM helps companies better identify and manage their risks, resulting in increased long-term profitability. There have been several cases of companies going bankrupt due to poor financial management in the last few years. All of this might have been averted if the organisations involved were equipped with well-integrated risk management tools. An organization's credit rating and, consequently, its operating expenses might both benefit from an improved awareness of risk across the board, making this a win-win situation for everyone involved. Strategic power, new vision, operational risk controls are all areas where ERM may add value.

Strategic Power: A risk strategy based on ERM can assist insurers manage their risk rather than relying just on solvency ratios.

Risk and compliance management in the business may be integrated as well. The threat confronted with new market entrants, particularly digital start-ups, may be warded off by ERM, as can the increase in the quality and transparency of the risk reports provided to the C-suite. They can also serve as a standard for evaluating the effectiveness of management decision-making when necessary.

New Vision: As a result of the ERM process, insurers may enhance their competitiveness by capturing important data, storing, managing, and using it. The capacity to respond quickly to market developments, such as the Brexit vote in the UK, and create new products that are more closely aligned with consumer wants are all examples of the second-order gains that may be reaped from these initiatives (Hoyt, & Liebenberg, 2008). ERM data may also be used to streamline portfolio management and improve capital computations.

Operational Risk Controls: Operational risk is less obvious in certain companies since it is not as well understood. Companies can better handle it now that ERM has taken it out of the dark. Integrating numerous risk components and other aspects of governance and compliance may be made easier using ERM. 风险管理计划essay代写

Implementation of ERM Programs

Focus of ERM

When implementing ERM, pay as much attention to the implementation process as to the choice to apply it. Listed below are six elements that US insurers focus on as they advance toward effective ERM implementation, and the steps they should take to guarantee a successful implementation.

To begin with, top managers and board members must have a clear understanding of what they want to achieve from their company plan, and what it takes to manage and mitigate risk. To properly manage assets, they must first identify potential risks. A lack of pre-operational risk planning frequently results in unexpected challenges that can break new high-risk ventures. Another is ERM balance sheet monitoring, where firms must use their increased mobility to make faster capital projections and adapt more efficiently to market shifts by combining financial, risk and performance measurements. Third, future legislation, such as IFRS 4 Phase II and IFRS 17 will complicate the situation even further, making it much more difficult for companies to comply with current and future standards (Mignolet, 2017).

In order to prepare for the potentially disruptive effects of new global legislation, companies should perform an infrastructure and business process evaluation that is strategic and operative. Fourth, risk professionals need to be able to influence a shift in the way people think about risk inside their organisations. Having a wide range of skills and knowledge in all elements of the company's operations, including managing data, accuracy of information, GRC, statistical tools and strategic planning is essential. 风险管理计划essay代写

Board members require the ability to develop their risk strategy and take action based on the material and information that ERM makes available for them to find out more about.

Risk management should become ingrained in every department of a firm as a matter of course, rather than just a concept. Internal and standard model will be the fifth topic. According to Teuguia, Ren, & Planchet (2014), when it comes to reaping the benefits of ERM, companies with internal model approaches have an edge.

It is possible to integrate ERM with business planning and performance management, conduct scenarios analysis as part of your strategy design and test unusual outcomes in order to establish investing or underwriting approaches through the use of internal models. With ERM, global businesses must develop a group reporting system that records connections across geographies centrally, while simultaneously keeping local structures to meet the requirements of the various regulators in different countries. Insurers must also be able to respond to the specialised needs of various lines of business and markets. Because various nations may regard autonomous cars differently. ERM initiatives at the local and group levels must take this into consideration when designing policies.

Structure Differences 风险管理计划essay代写

The value of ERM is determined by the structure's specific risk management requirements. The following illustrates risk management in the life and non-life insurance markets.

Figure 3

Life insurance - MetLife: Rebuilding the company around product lines is becoming more commonplace among life insurers as a means of enhancing return and reducing risk. With the introduction of Solvency II in Europe, which requires life insurance companies to focus more carefully on their particular solvency, the situation has become even more complicated. Life insurer, MetLife, which undertake insurance like pensions. Frequently give income assurances of as high as 3.5 percent a year. Making the desire for yield particularly intense (Milevsky, 2013).

In order to meet their investment goals.MetLife will require flexible strategies and capabilities that allow them to take on new risks. Tactical analysis and rapid response are critical in this specific situation and support the case for ERM functionality (internal model approach). Stress testing can mimic the consequences of market positions and identify the risks regarding investment choices thanks to unified data processing that integrates hypotheses and numerous sources of risk (see Figure 4 below). In today's volatile world, this is especially useful.

Figure 4

Non-life insurance - AAA Insurance: non-life insurance has less of the fund management forces at play. But the industry is still facing several highly destabilizing trends: Insurer’s goods, services, and price will be impacted by climate change, notably in terms of floods. Changes in consumer purchasing habits need new ways for insurers to interact with their clients. It is important to keep in mind that technology is always evolving. And this may have a significant influence on competitiveness. Non-life company, such as AAA Insurance, may be more resilient and stronger in the face of possible upheaval with ERM that goes beyond monitoring (Acharyya & Mutenga (2013). 风险管理计划essay代写

Conclusion

To summarise, the insurance industry has a tremendous impact on economic growth and development. However, because of its limitations, such as changes in consumer requirements and digital shift, as well as macroeconomic effect. An ERM system is necessary to better control its risk, analyse vast volumes of data, and execute more profitable business.

By using the example of a large corporation's main focus in ERM implementation and how different insurance companies use risk managemen. It was demonstrated that effective ERM implementation is required. Corporations must intensify their own risk, focus on the main parts, and take the steps necessary to ensure a successful implementation.

References

Acharyya, M. and Mutenga, S., 2013. The benefits of implementing enterprise risk management: evidence from the non-life insurance industry. Enterprise Risk Management, 6(1), pp.22-24.

Cole, H.L., Kim, S. and Krueger, D., 2012. Analyzing the effects of insuring health risks: On the trade-off between short run insurance benefits vs. long run incentive costs (No. w18572). National Bureau of Economic Research.

Holsboer, J.H., 2000. The impact of low interest rates on insurers. The Geneva Papers on Risk and Insurance. Issues and Practice, 25(1), pp.38-58.

Gollier, C., 2015. Long-term savings: the case of life insurance in France. Financial Stability Review (Banque de France), 19, pp.129-136.

Mignolet, F., 2017. A study on the expected impact of IFRS 17 on the transparency of financial statements of insurance companies.

Milevsky, M.A., 2013. Life annuities: An optimal product for retirement income. CFA Institute Research Foundation Monograph. 风险管理计划essay代写

Rishel, R., 2021. Redefining Life Insurance Development, Underwriting and Distribution. Life.

Teuguia, O.N., Ren, J. and Planchet, F., 2014. Internal model in life insurance: application of least squares monte carlo in risk assessment. URL: http://docs. isfa. fr/labo/2014.12. pdf (visited on 07/19/2018).

Than, H.F.M., 2019, Enterprise risk management, CFP events, retrieved from https://www.cefpro.com/wp-content/uploads/2019/07/ERM-20152.pdf

Tschoegl, L., Below, R. and Guha-Sapir, D., 2006. An analytical review of selected data sets on natural disasters and impacts. Louvain: Centre for Research on the Epidemiology of Disasters.

Ward, D. and Zurbruegg, R., 2000. Does insurance promote economic growth? Evidence from OECD countries. Journal of Risk and Insurance, pp.489-506.

Yates, J., 2005. Structuring the information age: Life insurance and technology in the twentieth century. JHU Press. 风险管理计划essay代写