Risk management: new challenges and opportunities for insurance sectors Dr. S.Manimaran B.E.,MBA, M.Phil.,Ph.D.,
Head of Department of Management Studies,
Professor and PSNACET.Dindigul.
Neyveli lignite corporation ltd. Neyveli
Risk management can be described as like the other management procedures of identification, assessment and prioritization of risk. Actually risk management is very much equal to walking on the rope. As defined in ISO 31000 the effect of uncertainty on objectives whether it positive or negative. Risks can come from uncertainty in financial markets, project failures, legal liabilities, credit risk, accidents, natural causes and disasters as well as deliberate attacks from an adversary. Risk
Risk analysis is the process of systematically identifying and assessing the potential threats and uncertainties that occur when trying to achieve a certain goal (such as completing a project), and then finding a reasonable strategy for most efficiently controlling these risks. Risk analysis also helps to define preventive measures to reduce the probability of these factors from occurring and identify countermeasures to successfully deal with these constraints when they develop to avert possible negative effects on the competitiveness.
The most common tool used in risk management is insurance. Besides the standard health, life, and possibly disability insurance, we have to look at the types of liability and property insurance that may we need. Specialized insurance for particular risks in business can also be necessary. For instance, in an industry a chemical component is used in production process, they need special toxic risk insurance. A sense of security may be the next basic goal after food, clothing, and Shelter. An individual with economic security is fairly certain that he can satisfy his needs (food, shelter, medical care, and so on) in the present and in the future. Economic risk (which we will refer to simply as risk) is the possibility of losing economic security. Most economic risk derives from variation from the expected outcome
Need for awareness on insurance products
Life insurance and general insurance have more products to facilitate the customer needs. According to most of the surveys individual lack the awareness, literacy and skills to adequately assess their needs for financial and social protection and to choose appropriate insurance services. Raising awareness and educating on individuals are challenging priorities for research studies. Because of trends towards increased responsibility of the individuals for the management of risks and coverage, as well as consequences wrong or inappropriate decisions. The education process in the insurance sector involves different types of stake holders’ insurance authorities, insurance entities and intermediaries, other insurance providers, distributors, NGOs and customers themselves.
Importance of insurance
Importance of insurance is definitely increasing and expanding. Households should be encouraged and provided with the possibilities to enhance their awareness, responsibility to the coverage of their overall risk exposure as well as their understanding the knowledge of insurance products. Yet little research has been undertaken on this subject. With in a frame work of general financial education insurance subject is being handled. Better understanding of financial products can be given to potential consumers. Evaluation of risk in new areas of personnel insurance Increase in perceived and real risk. Emerging catastrophic bond markets shows the rise in risk levels. The range of conventional and new large scale risks seems to have expanded and their frequency has increased. They included risk related to industrial (Bhopal), natural (earthquakes, floods), terrorist attacks, new technologies risks (cyber crimes), Health risk against new...
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