Risk management

Risk management

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  BY MAMTA
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  Risk Risk includes thepossibility of losing some or all of the original investment.
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  Type Of Risk Market Risk: The risk that the value of your investment will decline as a result of market conditions.  Interest rate risk :The risk caused by changes in the general level of interest rates in the marketplace.  Inflation or Purchasing Power Risk: The risk that the return on your investment will fail to outpace inflation.
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   Business Risk:This is the risk that issuers of an investment may run into financial difficulties and not be able to live up to market expectations  Credit Risk: For bonds, this is the risk that the issuer may default on periodic interest payments and/or the repayment of principal.  Exchange Rate Risk: This is the risk that returns will be adversely affected by changes in the exchange rate.
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   Country orPolitical Risk: This is the risk that arises in connection with uncertainty about a country’s political environment and the stability of its economy.
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  RISK MANAGEMENT The processof identification, analysis and either acceptance or mitigation of uncertainty in investment decision-making.
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  Characteristics Scientific approach Consider insurableand uninsurable risk Main emphasis on reducing cost of handling risk by using appropriate method
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  Cost Of Risk Componentsof the cost of risk:  Cost of expected losses  Cost of control of loss  Cost of loss financing  Cost of loss internal risk reduction method  Cost of residual uncertainty
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  Risk Management Information System(RMIS)  RMIS is designed to help in functions of risk management  Gathers information from various systems into one database  Data can be analysed from various angles
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  Uses of RMIS For reporting  For claim adjustment process review  For examination about reasons of accidents
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  Process Of RiskManagement Step 1 – Establish the context Step 2 – Identify the risks Step 3 – Analyse the risks (& evaluate) Step 4 – Treat the risks Step 5 – Monitor and review
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  Methods Of RiskManagement  Loss control- those actions which reduce expected cost of losses by reducing the frequency of losses  Loss financing- methods used to obtain funds to pay for offset losses that occur  Internal risk reduction  diversification  investment in information
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  THANK YOU