The significance of managing the risk managers’ top three concerns: interest rate risk, currency risk, and change in regulations

Topics: Risk, Insurance, Risk management Pages: 25 (5886 words) Published: April 16, 2014


Table of Content

Introduction………………………………………………………………………………...…..... 3 The intention and purpose of the topic……………………………….……………………..…….4 Time and place of the issue being presented……………………...…………………………..…..4 Other prominent risk concerned in the insurance industry……...…………………………..…….4 The analysis of the 3 different risks: Interest rate risk, Currency risk and Change in Regulation..5 Interest rate risk………………………………………………………………………...…5 Currency risk……………………………………………………………………….…....13 Change in regulation……………………………………………………………………..17 Conclusion……………………………………………………………………………………….23

Bibliography

Introduction
The term- traditional risk management concept focuses on, primarily, the pure risks rather than the operational, market, credit and other type of risks. Today the risk management concept is the recognition of conscientiousness to identify, define, quantify, categorize and control all of the risk facing the organization or entity. The risk involved in the market such as interest rates, changing regulations and currency risk can create uncertainties to the people involved with managing and running a business which grip these aspects. The top three concerns of risk managers in the current state of affairs are interest rate, the volatility of the currency markets and changing regulations, which are specifically macro business risk, came to be the prevalent worries for managers (Risk Managers’ Top 3 Concerns: Interest Rates, Currency Markets, Regulations, 2012). The companies or individuals are looking to the insurers and their products that deal with these three risks (interest rate risk, currency market and changing regulation) and respond to the natures of these risks. In addition, regulatory and market forces also generate incentives for property, life and casualty insurance companies to reexamine the existing strategies, processes and infrastructures for analyzing the risk involved and the current performances. The top insurers in the market compare their own business models with the risk management models and thus, focus on the aggregate risk exposures. This helps the managers understand the existing risk exposure of the company and mitigate those exposures as economically and efficiently as possible. It is very important for the insurance companies to regularly evaluate, emphasize and update their risk management capabilities.

The intention and purpose of the topic
The interest rate volatility, currency market risk and change in regulation frequently take place in the market and create major impact on the businesses who continuously deals with these changing factors. These risks, if not properly understood, can weaken the foundation of the institutions that continuously faces these risks. This paper contains analysis on several research papers, articles, reports and working papers, through which, understanding the risk, the impact of these risk in current market and strategies to follow to overcome these risk factors are discussed elaborately. By better understanding of these risks, however, company managers can gain greater insight in conducting business and managing the volatility of their company’s value. Time and place of the issue being presented

The topic has been presented in the insurance journal at November 9, 2012 as the top three concerns for the risk managers. (Risk Managers’ Top 3 Concerns: Interest Rates, Currency Markets, Regulations, 2012) Other prominent risk in the insurance industry

Based on the AON’s study about the major risks that are facing the business organizations, the top ten risks for 2013 are given below (Global Risk Management Survey, 2013): 1. Economic slowdown / slow recovery

2. Regulatory / legislative changes
3. Increasing competition
4. Damage to reputation / brand
5. Failure to attract or retain top talent
6. Failure to innovate / meet customer needs
7. Business interruption...


Bibliography: Coelho, H. (2013, August 19). Insurers prepare for interest rate hikes. Www.risk.net. Retrieved from http://www.risk.net/insurance-risk/feature/2289337/insurers-prepare-for-interest-rate-hikes
Currency Risk
Evolving Insurance Regulation-A new Dawn (Rep.). (2013, March). Retrieved http://www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/evolving-insurance-regulation/Documents/evolving-insurance-regulation-2013.pdf
Fleuriet, V., & Lubochinsky, C
Harrington, S. E. (2009, September). The Financial Crisis, Systemic Risk, and the Future of Insurance Regulation (Rep.). Retrieved http://www.naic.org/documents/topics_white_paper_namic.pdf
Hay, L
Vaughan, T. M. (2009). The Implications of Solvency II for U.S. Insurance Regulation.Social Science Research Network. Retrieved from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1350539
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • risk Essay
  • Essay on risk
  • Interest Rate Risk Essay
  • Risk management Essay
  • Interest Rate Risk Essay
  • Essay on risk assessment
  • risks Essay
  • RISK Essay

Become a StudyMode Member

Sign Up - It's Free