Page 10 - Life Insurance Today June 2015 SAMPLE

techniques. Enterprise Risk Management uses 'Integrated The work labour force around the world have still not been
Framework' encompassing the following issues: rewarded with improved safety measures in their
1. Capital Requirement workplace and as a result large number of deaths take
place in industrial accidents around the world. At times the
a. Insurers may choose one of the many approaches impacts on labours are direct and sometimes they indirectly
to calculate capital for credit, market & suffer from industrial accidents.
operational risk.
To quote an incident from world health
2. Supervisory Review Process organizations report: "One of the world's worst chemical
a. Contains the key principles according to which
insurers 'supervision should be done: accidents occurred around midnight on 2 December 1984,
i. Board and management; in the city of Bhopal in central India. A deadly cloud
containing the toxic gas methyl-iso-cyanate spilled from
ii. Risk management models and process; Union Carbide's large pesticide plant while most of the
population of nearly 900 000 people were asleep.
iii. Internal control to be set;
The exact figures for the number of people killed and
iv. Stress Testing. injured by the gas are disputed. According to official Indian
figures, nearly 3000 people died in the first few hours of
b. One of the targets is also to try motivating insurers the accident, while hundreds of thousands were harmed,
to hold capital buffers in excess of the minimum and more than 15 000 people have since died from cancer
requirement. and other diseases. Some estimates, however, have put the
numbers much higher, suggesting that 10 000 people died
c. Financial Supervision should be proactive before initially and over 20 000 subsequently.
insurers' solvency margin, net worth and capital
goes under the minimum requirement as stipulated Officially, it is estimated that about 120 000 people continue
by the regulator, the IRDA.. to suffer from chronic respiratory, ophthalmic,
reproductive, endocrine, gastrointestinal, musculoskeletal,
3. Market Discipline neurological and psychological disorders associated with
a. Includes recommendations and requirements
especially regarding disclosure information.

3. Risk management in life insurance &
application of ERM:

Risk Management is applicable to all walks of life. Generally
we attribute the need for Risk Management in General
Insurance. But the concept is equally applicable in Life
Insurance also. In this article we shall give a brief overview
of necessity of risk management in life insurance. The
definition of risk management states "the art of managing
the risk in such a way that the impact of risk is avoided or
reduced to great extent." Risk can affect both property
and life. Though lot of discussions take place on risk
management of property, the risk management in life is
not given the equal importance.

A large number of persons are employed in industries. Some
of the hazardous industries pose severe challenges to health
of the workers employed in these industries. Are all the
industries taking suitable care of their manpower? The
answer to this question would certainly be NO.

A dream becomes a goal when action is taken toward its achievement.

6 June 2015 Life Insurance Today

Insurance Training Centre © Call 09883398055 / 09883380339