Research On Enterprise Risk Management Of Insurance Company

Insurance company earns profits by taking risks, which determines the importance of risk management. When the risk environment changes, traditional risk management presents much shortage and can not satisfy insurance company's demand any more. Enterprise Risk Management which reconstructs and upgrades traditional risk management is the most advanced method in the area of risk management.Traditional risk management theory separates risk management, company governance and internal control. It does not carry out risk management from the whole company's point, so it has the limitation of unilateralism, isolation and immovability. ERM is a brand new risk management method. It combines company governance, internal control and risk management together, recognizes the correlation between risks, and directs the future of risk management technology. Company governance and internal control, capital and risk control are three parts of ERM. Company governance and internal control resolves the problems of governance risk and operational risk. It is the first layer of ERM. Capital management with the tool of economic capital manages risks from the point of view of the whole company. It is the second layer of ERM. Risk control is the process of managing business risks on the micro level. It is the third layer of ERM. The three layers are main risk management methods and core contents of ERM.The operation of ERM relies on a perfect system. The choice of risk management structure, the construction of information system, the supervision of audit and the build of risk culture provides ERM with organization, IT platform, supervision and culture environment. These four aspects constitute the operational system of ERM and influence the appliance effect of ERM in insurance company. In order to fully realize the function of ERM, insurance company should insist on improving the efficiency of the operational system.This dissertation researches on insurance company's ERM with economics, management science and insurance theory. There are totally eight chapters:Chapter one is the introduction of the dissertation. It presents the topic to be researched, the background for choosing the topic, and the purpose and practical significance of studying on this topic. A brief explanation is given regarding the logical sequence, the research approaches used, the structure, and the main innovative ideas.Chapter two analyzes the basic theory of ERM. It discusses the background, the principal and the characteristic of ERM, and reviews the relevant literature on the topic. Then, it defines the concept of ERM of insurance company, researches the three layers, the process and the operational mechanism of ERM.Chapter three researches the institutional foundation of ERM in insurance company. It briefly introduces the basici theroy of institutional economics, and constructs a logic framework of ERM. Then, it takes COSO as an example to analyze ERM. On basis of the introduction of the speciality insurance company, this chapter analyzes the institutional arrangement of ERM and discusses the importance of company governance and internal control.Chapter four analyzes the capital management under ERM framework. It presents the importance of capital from the point of financial risk. Then, the determination of capital adequacy and the shortage of solvency framework on evaluating capital adequacy of insurance company are discussed. Finally, this chapter introduces economic capital and the way of applying economic capital in ERM.Chapter five researches on risk control under ERM framework. First, it classifies insurance company's risks from the point of unexpected loss, brings out the concept of risk control, and classifies risk control into four ways. Then, this chapter analyzes two main innovative risk control methods which are financial reinsurance and catastrophe bond, and discusses the way of implementing these two methods.Chapter six does research on the operational mechanism of ERM. It analyzes the operational mechanism of ERM from four aspects, which are the choice of risk management organization, the support of information system, the supervision of audit and the build of risk culture.Chapter seven compares the international experience of ERM. It analyzes the practice of ERM in AXA, Munich Re, Alliance and Swiss Re, and abstracts some useful illuminations for the construction of ERM in China.Chapter eight is the end of this dissertation. It concludes the former research and gives the final conclusion.