ZAVAROVALNICA TRIGLAV, d.d. page 1 R ISK M ANAGEMENT IN I NSURANCE BUDVA, 18 OCTOBER 2012 Author:...
-
Upload
corey-wood -
Category
Documents
-
view
219 -
download
3
Transcript of ZAVAROVALNICA TRIGLAV, d.d. page 1 R ISK M ANAGEMENT IN I NSURANCE BUDVA, 18 OCTOBER 2012 Author:...
ZAVAROVALNICA TRIGLAV, d.d. page 1
RISK MANAGEMENT IN INSURANCE
BUDVA, 18 OCTOBER 2012
Author:
Dr. Mojca Piškurić
Chief Risk Officer
ZAVAROVALNICA TRIGLAV, d.d. page 2
Risk Management Basics
Risk management is a corporate activity
risk management ≠ underwriting (upravljanje rizicima ≠ preuzimanje rizika)
Risk management is a process
how the decisions are taken
what business activities are undertaken
what business activites are rejected (limits…)
ZAVAROVALNICA TRIGLAV, d.d. page 3
Three Lines of Defence in Risk Management
Board of directors,
underwriters,investment managers,
sales, claims, etc.
Risk management
service, risk committee
Internal audit department
Active risk mgmt
Risk mgmt system setup
Risk mgmt system
oversight
ZAVAROVALNICA TRIGLAV, d.d. page 4
Risk Management Process
ZAVAROVALNICA TRIGLAV, d.d. page 5
Risks of a Life Insurance Company
According to Solvency 2:
investment risks (market, credit)
actuarial risks (mortality, longevity, disability, etc.)
lapse risk
expense risk
CAT risk
operational risks (processes, people, systems, external)
ZAVAROVALNICA TRIGLAV, d.d. page 6
Typical Risk Profile
Market risks represent more than 40% of overall risk
because of ALM risk of life insurance
Biggest core business risks are lapse and expense
lapse directly linked to deteriorating economic conditions
expense competition is driving up commisions (tied agents and brokers) in our region
ZAVAROVALNICA TRIGLAV, d.d. page 7
Typical Risk Profile (cont.)
Actuarial risks are typically very small
this type of risks measures possible errors in actuarial methods
Operational risks are linked to business voulme
CAT risk typically reflects lapse and expense development
ZAVAROVALNICA TRIGLAV, d.d. page 8
How To Set the Risk Appetite
Use appropriate measurable indicators
dividend payments
target capital adequacy surplus
accounting profit
zero tolerance risks
Consider wider economic circumstances
Make sure the indicators are relevant to business
ZAVAROVALNICA TRIGLAV, d.d. page 9
Who Influences Risk Appetite
Life insurer
Owners, investors
Legislation, Supervisory
agency
employees
Policyholders
Other stakeholders
ZAVAROVALNICA TRIGLAV, d.d. page 10
Key Strategic Risks
Financial risks (capital and cashflow pressures)
Competition
Regulatory actions
HR risks (staffing, knowledge, fraud)
Structural resources (software systems, proprietary information)
Internal bottlenecks
ZAVAROVALNICA TRIGLAV, d.d. page 11
Conclusion
An efficient risk management system addresses key strategic risks and uses transparent methods to achieve favourable business results.