1. Insurance in Risk
Management
By
V Ramakrishna
India Insure Risk Management Services Pvt Ltd

2. Corporate Governance
“ It is the acceptance by the management of the
inalienable rights of shareholders as the true owners
of the corporation and of their own role as trustees on
behalf of the shareholders”
- Committee on Corporate Governance
February 8th 2003

3. Corporate Governance is about…..
 Commitment to values
 Ethical Business Conduct
 Making a distinction between personal and corporate
funds
 Openness, Integrity & Accountability
 Maintaining confidence of investors- Foreign &
Domestic
 Induce stable source of financing
 Improving the economic efficiency of the firm.

4. Risk Management as part of
Corporate Governance
 Business is synonymous with Risk
 Structured definition and management of
risks.
 Board to be fully aware of the risks facing the
company
 Shareholders to know the process by which
the companies manage their risks

5. Need for Risk management
 Uncertainty in Enterprise
 Growing Complexity in Business Environment
 Statutory Obligations
 Contractual Obligations
 Social Obligations

6. Risk Management
 “Risk Management is the Identification,
Analysis and Economic Control of those
RISKS which can Threaten the Assets
(Property, Human) or the Earning Capacity of
an Enterprise”

7. The Universe of Risk
E N T E R P R IS E
O P E R A T IO N S F IN A N C IA L S T R A T E G IC K N O W LE D G E
P R O C E SS C A P IT A L S T R U C T U R E S TAKE HO LDERS IN T E L E C T U A L
P R O PE R TY
P H Y S IC A L A S S E T S R E P O R T IN G G O V E RN A N CE IN F O R M A T IO N
M A NA G E M E NT
P E O P LE C R E D IT A N D L IQ U ID IT Y M A R KE T STR U CTU RE S Y STEM S
LE G AL M A RK ET

8. Process of Risk Management`
 Risk Identification
 Risk Measurement
 Risk Control
 Risk Transfer
 Risk Financing
 Risk Retention

9. Risk Assessment
FINANCIAL IMPACT:
Threshold Limit to be decided based
on Medium Risk Very High Risk
Size of the corporate
Probability
Financial Impact
PROBABILITY OF
OCCURRENCE:
Organization history & Industry Low Risk High Risk
Experience
to be considered

10. Handling Risk
Risk Levels
Low & Medium Normal Monitoring at the operational level
High Close control of all potential contributing factors by the Risk
Management Team
Very High Risks of this level should be actively tracked for decisions
by the Risk Management Committee.

11. Enterprise Risk Management
Safeguard
Risk
existing
optimization
value
Financial engineering of risk
and capital

12. Insurance
 All Risks are not Insurable
 Essentials of Insurance
 Insurable Interest
 Utmost good faith
 Procedure for Insurance
 Identification of Risks
 Quantify the Insurable value
 Evaluate the choices
 Proposal
 Payment of premium
 Policy Documentation
 Claims
 Administration System

13. Insurable Risks
PROPERTY RISKS PEOPLE RISKS
Damage to Physical Assets Loss to Employees
 Acts of God  ILL Health and accident
 Accidents  Death
 Break down  Overseas travel
FINANCIAL RISKS LIABILITIES RISKS
Monetary Loss from Loss from Operations
 Theft and Burglary  Product liabilities
 Business interruption  Public liability
 Bad credit  Directors & Officers liabilities
 Errors & Omissions liabilities

14. Focus Areas for Insurance
Management
 Identification of Internal & External Pure Risks
 Existing Risk Control Measures Review
 Risk inspection
 Risk Audit
 Scrutiny of Existing Insurance Covers
 Coverage
 Rates & Deductibles (Compulsory self insurance)
 Defining Standard SOP for Claims Control
 Guidelines on documentation

15. Key Areas of Consideration
 Choice of Insurer
 Industry Rating
 Claims Settlement ability
 Sustainability of the company
 Service levels & infrastructure
 Choice of Intermediary
 Representation of the insurance market
 Knowledge of insurance amongst all industry segments
 Service levels & infrastructure

16. Emerging Challenges
 De regulation of Indian Insurance market
 Global markets impact on Local market
 Options for self insurance
 Market driven pricing

17. Thank you
India Insure Risk Management Services Pvt Ltd