On Risk Management Of Life Insurance Companies Within The Framework Of C-ROSS

Insurance is an important industry in modern economy and an significant pillar of financial system and social security system.The financial industry is a high-risk industry.Preventing and defusing financial risks is a major task that cannot be ignored in financial reform,financial development and financial supervision.As a special industry to absorb and manage risks,insurance must perform risk management function effectively and strengthen the control of its own risks.At present,insurance industry is facing internal and external risks which are complex.At the same time,the risk management of life insurance companies is facing arduous tasks and significant challenges.The problems are prominent in insurance risks,market risks,operation risks,reputation risks and other aspects.Some insurance companies face the risk of insufficient capital and the risk management of the whole industry urgently needs to be improved.Solvency supervision is the core of modern insurance supervision.On the basis of lessons from international experience,China established the second generation of risk-oriented solvency regulation system(China Risk Oriented Solvency System,C-ROSS)in 2015.C-ROSS adopts the "three-pillar" financial supervision framework,combines quantitative risk management with qualitative risk management,and pays attention to the improvement of industry risk management ability.C-ROSS is a set of risk-oriented solvency supervision system with Chinese characteristics,which plays an important role in preventing and controlling financial risks and guiding industrial transformation and upgrading.Furthermore,it has a significant impact on the risk management concept and management technology of insurance companies.In this context,it has important practical significance to study the risk management of insurance companies within the framework of C-ROSS.This paper may make contributions in the following aspects: Firstly,on the study of C-ROSS and the risk management of insurance companies,the existing literature mainly focuses on the impact of C-ROSS and the coping strategies of insurance companies.This paper studies the operating mechanism and core concept of C-ROSS from the aspects of the risk classification,and demonstrates the idea of insurance companies building a comprehensive risk management system based on C-ROSS.Secondly,the existing literature mainly focuses on the measurement of a single risk,and few involve the systematic research of various risk management.This paper takes the whole-process management of seven types of risks as the main line,and discusses how to effectively identify,measure and control various risks.Finally,as for the research on the factors affecting the solvency of insurance companies,the existing literature mostly focuses on the traditional panel data model.Based on model averageing and sparsity oriented importance learning,this paper analyzes the influencing factors of solvency of life insurance companies,identifies the important factors affecting solvency and their impact.First of all,this paper introduces risk management theories,risk management process and risk classification within the framework of C-ROSS.At the same time,it reviews relevant research achievements of risk management of insurance companies,the solvency and risk management of insurance companies,and the influencing factors of the solvency,and put forward research questions.Secondly,this paper summarizes the development and solvency reform process of insurance,analyzes the overall framework of C-ROSS,compares the solvency system with that in other countries,and discusses the relationship between C-ROSS and the internal insurance risk management.After that,a theoretical viewpoint related to risk management system is formed.Then,this paper analyzes the situation of development and risks of life insurance industry,and studies the current situation of risk management and problems of life insurance companies in China.Thirdly,within C-ROSS framework,insurance risks,market risks and credit risks are the three types of capitalized risks of insurance companies.While operation risks,strategy risks,reputation risks and liquidity risks are the four types which are difficult to capitalize for insurance companies.In this paper,the identification and measurement of these seven types of risks are sorted out respectively,and combined with typical cases for in-depth analysis.Life insurance companies can combine their own risk characteristics to optimize risk measurement parameters and risk evaluation indicators,accurately identify and measure all kinds of risks.Fourthly,in view of the outstanding problem that insurance companies can not integrate risk management into business activities,this paper selects the panel data of67 life insurance companies from 2016 to 2020 to construct an index system,consisting of 7 categories and 22 variables.Based on model averaging and sparsity oriented importance learning(SOIL),this paper analyzes the influencing factors of the solvency of life insurance companies,identifies the important factors affecting solvency and their impact.Life insurance companies can incorporate variables that have important impact on solvency into the risk index system,improve the company’s risk preference system,and adopt prudent risk management strategies.Finally,based on the factors affecting solvency,combining with the prominent problems existing in various risk management,this paper puts forward various risk responses and control measures for life insurance companies and discusses the countermeasures to improve the risk management system by focusing on the management and control links that life insurance companies should strengthen.