RISK MANAGEMENT PPT FINAL

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RISK MANAGEMENT:

RISK MANAGEMENT PRESENTED BY: PIYOOSH BAJORIA

INTRODUCTION:

INTRODUCTION Insurance is a way of protecting against financial losses Insurance rate is factor used to determine the amount, called premium, to be charged for a certain amount of insurance coverage

INTRODUCTION CONT…:

INTRODUCTION CONT… Insurance is a form of risk management , primarily used to hedge against the risk of contingent, uncertain loss Insurance defined as the equitable transfer of risk of loss, from one entity to another, in exchange for payment

Principal of Insurance:

Principal of Insurance Offer and acceptance : Consideration Consensus “ad idem” : Legality of the object or purpose

INSURANCE SECTOR:

INSURANCE SECTOR The Insurance sector in India governed by Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and General Insurance Business (Nationalisation) Act, 1972, Insurance Regulatory and Development Authority (IRDA) Act, 1999 and other related Act Nearly 75% of Indian populations are without Life insurance cover and the Health insurance. This is an indicator that growth potential for the insurance sector is immense in India . There are now 29 insurance companies operating in the Indian market – 14 private life insurers, nine private non-life insurers and six public sector companies.

PowerPoint Presentation:

IDBI Federal Life Insurance Co. Ltd India’s premier development and commercial bank, IDBI India’s leading private sector bank, Federal Bank , India and Europe’s premier Bancassurer, Fortis , Netherlands IDBI owns 48% equity, Federal Bank and Fortis own 26% equity each. Registered as a Life Insurer under Section 3 of the Insurance Act, 1938 with IRDA on December 19, 2007. A joint venture between three leading financial conglomerates -

MARKET SHARE OF DIFFERENT INSURANCE COMPANIES:   :

MARKET SHARE OF DIFFERENT INSURANCE COMPANIES:

%:

% Insurance Life Insurance General Insurance Term Plan Investment Plan Health Plan Wealth Insurance Incomesurance Bondsurance

PowerPoint Presentation:

Premium Paying Period Payout Period Policy Term Premium paid increases payout for all the years of the payout period Flexibility to choose PPT of 5, 10 or 15 years; increase depends upon the interest rates prevailing at that time; the increase applies to each yearly payout You can choose 5 or 10 years as payout period in which you will receive the Guaranteed Annual Payout Additional Annual Payout Is paid over & above Minimum Annual Payout; it is declared each time premium is paid & is paid each year during the payout period Flexible Payout Option Premium Payment Period Minimum Annual Payout Flexibility to opt for annual payouts or allow it to accumulate earning interest which can be withdrawn at maturity or whenever needed Flexibility to choose PPT of 5, 10 or 15 years; premium can be paid monthly, quarterly, half-yearly or yearly Is declared at inception based on Premium Payment Term & Payout Period choice. This amount is paid each year during the payout period For internal training purpose only

PowerPoint Presentation:

Guaranteed Annual Payout Minimum Annual Payout Additional Annual Payout Customers receive Guaranteed Annual Payouts during the Payout Period Minimum Annual payout is declared at inception and is guaranteed Additional Annual payouts are linked to rates on Government securities ( G- Secs ) prevailing at the time of premium payment Payouts For internal training purpose only

PowerPoint Presentation:

←Sum Insured→ Premium Payment Term Survival Benefit Term (Payout Period) Death benefit during the PPT increases by the Additional Annual Payout (AAP) every time a premium is paid Death benefit during the survival benefit term decreases by the Guaranteed Annual Payout (GAP) which is paid out Life Cover in Incomesurance For internal training purpose only

RISK MANAGEMENT:

RISK MANAGEMENT Risk Management is the name given to a logical and systematic method of identifying, analysing , treating and monitoring the risks involved in any activity or process . Process steps that enable improvement in decision making A logical and systematic approach Identifying opportunities Avoiding or minimising losses It’s a good mangement practice.

WHO USES RISK MANAGEMENT???......:

WHO USES RISK MANAGEMENT???...... Finance and Investment Insurance Health Care Public Institutions Governments Risk Management practices are widely used in public and the private sectors, covering a wide range of activities or operations. These include:

PROCESS OF RISK MANAGEMENT::

PROCESS OF RISK MANAGEMENT: The Risk Management process steps are a generic guide for any organisation , regardless of the type of business, activity or function. There are 7 steps in the RM process

BASIC STEPS ARE ……:

BASIC STEPS ARE …… ESTABLISH THE RISK IDENTIFY THE RISK ANALYSE THE RISK EVALUATE THE RISK TREAT THE RISK

PowerPoint Presentation:

RISK is dynamic & subject to constant change, so the process includes continuing: & MONITORING & REVIEW COMMUNICATION & CONSULTATION

ESTABLISH THE RISK:

ESTABLISH THE RISK The strategic and organizational context in which risk management will take place. For example, the nature of our business, the risks inherent in our business and our priorities.

IDENTIFY THE RISK:

IDENTIFY THE RISK Defining types of risk, for instance, ‘Strategic’ risks to the goals and objectives of the organisation . Identifying the stakeholders, ( i.e.,who is involved or affected). Past events, future developments.

ANALYSE THE RISK:

ANALYSE THE RISK How likely is the risk event to happen? (Probability and frequency?) What would be the impact, cost or consequences of that event occurring? (Economic, political, social?)

EVALUATE THE RISK:

EVALUATE THE RISK Rank the risks according to management priorities, by risk category and rated by likelihood and possible cost or consequence. Determine inherent levels of risk.

TREAT THE RISK :

TREAT THE RISK Develop and implement a plan with specific counter-measures to address the identified risks. Consider: Priorities (Strategic and operational) Resources (human, financial and technical) Risk acceptance, (i.e., low risks)

CONTINUE………:

CONTINUE……… Document our risk management plan and describe the reasons behind selecting the risk and for the treatment chosen. Record allocated responsibilities, monitoring or evaluation processes, and assumptions on residual risk.

MONITOR & REVIEW:

MONITOR & REVIEW In identifying, prioritising and treating risks , organizations make assumptions and decisions based on situations that are subject to change, (e.g., the business environment, trading patterns, or government policies). Risk Management policies and decisions must be regularly reviewed.

RISK ASSESSMENT:

RISK ASSESSMENT Responsibilities must be allocated: Appoint a Risk Management analyst with experience and analytical skills. Form a Risk Management Committee, representative of operational areas. Conduct Risk Management Workshops. Determine operating procedures.

Risk Assessment:

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

USING RISK MANAGEMENT:

USING RISK MANAGEMENT The starting point is the Action Plan : Allocate responsibilities, e.g., a Risk Management Champion and a working party. Evaluate how Risk Management processes can be best applied in our national environment. Survey existing skills and do a training needs assessment. Catalogue existing sources of data or information that can help in identifying risks.

Insurable Risks:

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

INVESTMENT OF ASSET OF IDBI FEDERAL:

INVESTMENT OF ASSET OF IDBI FEDERAL Section 27 of Insurance Act 65% GOVERNMENT SECURITIES & 35% SPECIFIED STOCKS Section 27C of Insurance Act “ No Insurer shall directly or indirectly invest outside INDIA the funds of the policy holder’’

PowerPoint Presentation:

THANK YOU

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