Page 150 - Risk Management in current scenario

industry in India if such events occur. Planning for such risks should be a
part of the risk management.

Environmental Risk:
Environmental risk is expected to arise from extreme weather condition,
failure to adapt to the climate change, natural catastrophe, biodiversity
loss & ecosystem collapse and manmade environmental catastrophe.
These events have been in news in recent past. Such events can impact
ability to grow food, access to water which could lead to sudden and
uncontrolled population migration.

What does this mean for the Indian context, as the country is still
dependent on the monsoon rain, any extreme weather condition likely
to impact on the ability to grow food leading into dependence on buffer
food stock resulting into immediate increase in inflationand affecting
interest rate.

Any catastrophe event likely to increase both death and sickness claims.
Therefore, environmental risk is likely to increase following key risks for
the insurance companies
X Inflation and interest rate
X Mortality and Morbidity
The risk assessment for this risk can be performed through stressing
economic and demographic risk factors together to assess worst possible
scenario. To manage risk action plan maybe drafted to take preventive
measures should eventunfold.

Economic:
Under this category, WEF has identified unemployment and
underemployment, Fiscal crisis, asset bubble, failure of financial
mechanism or institution, energy price shock, deflation, failure of critical
infrastructure and unmanageable inflation as key risk events.

India being an expanding economy, some of the risks mentioned above

148 | Risk Management in Current Scenario