Сoncept of Risk Management in Insurance Companies

The work on a subject «Сoncept of Risk Management in Insurance Companies» contains 15 figures and 10 tables. The volume of work is 77 pages. 49 sources were used for writing of this research. Keywords: risk management, insurance company, financial stability of the insurer, risk indicators EVA and RAROC.Insurance companies, being at the same time both the subject and the object of management of risk, are under the influence of two kinds of risks: both the risks which arise directly from activity of insurance company as object of economical activity, and the risks accepted from insurants. Therefore it is almost impossible to ensure reliability and financial sustainability of insurance company without effective system of risk management. Moreover, whereas foreign practice indicates the active application of a risk management by insurance companies, the risk management in insurance industry in Russia didn't gain proper development yet that points to urgency of a considered problem.The object of the research is a risk management system in insurance companies. The subject of this study is methods of risk management on the example of concrete insurance company.The development of the concept of risk management system of insurance companies is the objective of our research.There is a large number of works of the Russian and foreign authors in scientific literature who study issues of risk management in insurance. However during the analysis of literature it was revealed that the fundamental practical investigations on a problem of risk management belong to foreign scientists whereas in the Russian literature issues concerning a risk management and it’s methods remain not adequately explored.Scientific novelty of research consists in introduction in system of risk management of insurance companies the innovation methods, namely, application of such risk indicators as EVA and RAROC.In chapter 1 «Risks and their influence on financial stability of insurance company» theoretical aspects of risks and their impact on activity of insurers are considered. Special attention is given to questions of financial stability of insurance organizations. Furthermore, methods of an assessment of risks are studied and dynamics of the Russian insurance market for 2008-2013 is analysed.In chapter 2 «System of risk management of insurance company» theoretical aspects of creation the risk management in insurance companies are considered. We have studied up-to-date models of risk management as well as the risk management concept on the basis of EVA and RAROC – the risk indicators which are widely applied in foreign insurance companies. Besides, the concept of reengineering was considered. In addition prevalence of a risk management in the Russian insurance companies at present time is analysed.In chapter 3 «The risk management system of JSC Insurance Company Allianz» operation of the company is described, the assessment of its position in the insurance market is carried out and the structure of a portfolio of insurance is considered. In this chapter the analysis of financial position of the company through coefficient approach is carried out. Furthermore, the risk management system of the company is analysed, then the complex system of risks management is presented and recommendations for the company on basis of the analysis are offered.So, the practical part of the study was devoted to assessment of risk management on the example of insurance company «Allianz». First of all we have carried out the analysis of financial stability of the company for 2011-2013. Results show that the company doesn't demonstrate too high stability as values of all coefficients are unstable, and the most part of indicators doesn't satisfy the normative values.For obtaining a reliable result, the assessment of the system of risk management was carried out in three stages: through loss ratio, models of risk prediction and risk indicator EVA. As a result we have revealed that existing risk management system of the company have weaknesses – despite positive results for first two stages of our research, the indicator EVA has negative value during all considered periods. As the main recommendation offered the company on the basis of results of research, we should note capital reallocation between lines of business according to value of the indicator EVA using which it is possible to analyse where exactly value is created.In summary we put forward the risk management concept for the Russian insurance companies, in which the «innovation» stage was an application of indicators EVA and RAROC.