Page 22 - Life Insurance Today July - December 2020

1. "Raksha" or protection; In India, existing Regulatory Bodies are:
2. "Vreeddhi" or enhancement; 1. Department of Company Affairs;
3. "Palaona" or maintenance; 2. SEBI & RBI - for Banks;
4. "Yogakshema" or safeguard. 3. BSE & NSE - for Share Market;
4. IRDAI for Insurance Industry.
The substitution of the state with the company, the king
with the CEO or the board of the company, and the subjects Current Indian Life Insurance Market's
with the shareholders, brings out the spirit of corporate
governance is the belief that public good should be ahead Agenda:
of private good; and that the company's resources should All the Indian Insurers by this time have introduced a
not be used for personal benefit. The fourfold duties of the formal program to evaluate and record their most
king can be interpreted to imply- significant risks and will have senior management
1. Protecting the shareholders wealth, commitment. The first step is the Risk Management is
2. Enhancing the wealth through proper utilization of always the Risk Identification. Risks that may be identified
assets, by them will definitely include:-
3. Maintenance of that and not frittering away in 1. Loss of IT systems, e.g. frequent down-time of
unconnected and non-profitable ventures or through computer working.
expropriation, and above all, safeguarding the interests 2. Breach of systems security, e.g. cyber threats &
of the shareholders. hacking on internet.

3. Poor prioritization of systems development.
Scandals disturbed the otherwise complacent and Placid
Corporate scenario in USA (Enron's case). 4. Failure of partner/third party relationships, e.g. in
performance delivery.
The Cadbury Committee followed by the Greenbury 5. Failure in effectively managing relationships.
Committee in UK set a tone for Corporate Governance. The
6. Loss of key personnel, e.g. technical insurance expert
Hampel Committee took the concept further. The
Corporate Governance initiative began in India in 1998 - through retirement / otherwise.
Voluntarily Code published by the CII. According to the 7. Damage to reputation, e.g. loss of trust from mis-
same, Sec.297 with exception of sub sec (3), Sec. 299 selling, demonstrating unfairness to customers, fines,
(Financial interest of Directors), Sec.322 & 329 (liability of non-compliance with legal requirements etc.
Directors/Managers), Criminal liabilities as per Sec. 44(4), 8. Loss of competitive advantage by failing to innovate,
58 A (6) (b), 58 B, 63, 73, 105, 202(1), 209 A of Companies loss of monopoly/ tie-up arrangements, etc.
Act, and likes suggest various coercive and punitive 9. People issues, e.g. moral issues, lack of resources
measures.
leading to stressful situations.
10. Lack of management information or poor, inaccurate
management information which cannot be relied upon.

11. Financial statement could be wrong, for example, the
amount of disclosures could be wrong.

Examples of other business risks are fire, flood, litigation,
IT viruses or anything that could have a damaging impact
on the business. Part of evaluating the processes is to
mitigate the threats and determine the exposures and this
should also help to identify and exploit opportunities. The
main responsibility for both risk management and

22 July - December 2020 Life Insurance Today