PhD Dissertation Writing Help in Risk Management
PhD Thesis Proposal on Risk Management
Risk Management-New Challenges and Solutions-PhD Dissertation and Thesis Writing Help
Corporate risk management, insofar as it existed as a - largely unnamed - concept before the latter part of the 20th century, was usually the remit of the company secretary or head of administration and generally formed no more than a part of that individual’s finance function. However, the position of dedicated insurance manager gradually evolved as exposures increased through such factors as organic business growth, changes in law (particularly new or greater responsibilities being created by both statute law and broader approaches by courts to issues of tort liability), greater consumer and customer expectations coupled with changing attitudes within society and - that frequently present driver of change - significantly increasing costs of risk and risk protection. While the insurance manager was the individual designated to become involved in risk management as and when the opportunity arose, the role was sometimes ill-defined and occasionally regarded by management as little more than an cost containment function; allowing restricted scope for a proactive attitude to the management of risk. That position was succeeded by the risk manager, whose role,
while varying between organisations, is - in its most ‘advanced’ form - to consider all of the company’s risk exposures, both insurable and uninsurable, facilitating an integrated approach to those many and varied exposures.
The traditional role of the risk manager was to direct his attentions towards insurable risks that were largely defined by insurers. They included fire, other property damage, theft, business interruption, employers’ liability, other liabilities (products, public, professional and directors’ and officers’), goods in transit and marine cargo, motor fleet, engineering (plant and breakdown). The area of remit seldom, if ever, extended to the company’s financial exposures, such as interest rates, foreign exchange and commodity prices. These were traditionally the responsibility of the company treasurer, whilst corporate strategic exposures were determined by the board.
Certain risks have only become the subject of specific insurance coverages relatively recently and were traditionally either uninsurable or difficult to get coverage for, such as financial and political risks, kidnap and ransom, product tampering and adverse publicity. As the huge potential bills for the past extraction, processing and manufacturing activities of certain industries became apparent — principally those which
contaminated the environment or involved the production/use of hazardous substances (notably asbestos) — insurers moved to protect themselves in the future from the resulting liabilities and accumulation problems by applying blanket exclusions and modifying the basis of much liability coverage from ‘occurrence’ to ‘claims-made’.
There are other exposures - probably including some presently not recognised - that have the potential to produce significant future claims. Those identified include exposures such as health impairment related to active and passive smoking and alcohol, Repetitive Strain Injury (RSI) and Electromagnetic Fields (EMFs). Given the legal uncertainties, and that, in some areas, there is often little established data on which to base projections of costs, it remains a matter of conjecture as to whether they will develop into major problems or remain relatively financially insignificant.
A further group of risks was classed as business or entrepreneurial risk and generally outside the scope of insurance products or traditional financial hedging. This group included health and safety, patent infringements, consumer boycotts, delayed product launch, mergers and acquisitions, restructuring, strikes, supply-chain disruption, competition and mismanagement. It has become increasingly common for businesses to recognise that such ‘exposures’ need active consideration and risk management. While the result may not be to engage with some non-traditional form of protection or hedge against such risks - although innovation has perhaps never been more evident review process may itself demonstrate the possibilities for managing down such risks within an integrated plan. In essence, an important part of the modern risk manager’s
role is to contribute to the process of smoothing out the volatility of earnings, enhancing the company’s risk and reward profile for its capital providers and minimising the cost of or amount of equity required.
In the past, each of an organisation’s perceived risks tended to be reviewed in isolation. The historical data for that risk would be assembled and assessed, together with the probability and potential severity of a loss. Those risks that were the subject of insurance cover were generally renewable on an annual basis, so that submissions had to be regularly revised and updated. Further, the annual nature of the transaction and the
attendant negotiations often turned what the parties thought of - particularly when commercially expedient - as a long-term relationship into a series of short-term deals liable to significant changes and thus not always conducive to even medium-term business planning.
Aspects of risk management
Risk managers are regularly reminded that there is no ideal model for risk management, which will be largely influenced by the size, nature and objectives of the company and the risk manager’s success in persuading the board to actively support a risk management culture throughout the entire organisation. However, the following are basic steps in identifying and reducing risk. But first, it must be borne in mind that ‘risk’
should not automatically be equated only to ‘threat’, as most commercial companies are in the business of taking risks of one type or another and a primary consideration is whether the risk/reward balance is acceptable. Sound risk management, by, inter alia, identifying, assessing and quantifying risk, enables senior management of an organisation to make a more fully informed judgement as to the true nature of that commercial balance. Fundamentally, risk offers the possibility of reward.
The constantly-changing economic, legal, social and technological factors which impact upon a company is studied in risk profiling or mapping, which is one of the basic tools of risk management.
Risk profiling involves identifying the many risks to an organisation and conducting an analysis of their likely magnitude and frequency and potential consequences, including a ‘worst case’ scenario. Information is gathered about the business and the sector in which it operates, such as its competitors and any internal or external threats. Collecting this information is being assisted by increasingly sophisticated risk information systems, which are incorporating more analytical and World Wide Webbased functions.
Both quantitative and qualitative (intuitive) measures are employed in the process — as is, inevitably, an element of the unknown. From this, a ‘top down’ risk profile is produced, from which risk assessment and contingency plans can be developed to minimise the impact and cost of risk.
A risk profile would attempt to identify a wide range of factors, with the following the most likely to be included:
• the company’s loss history, sub-divided into those losses which were insured and those which were not covered;
• the various threats and hazards faced by the company; their degree of importance to divisions and individuals within the company and whether they are linked, so that the occurrence of one would be likely to trigger another;
• the main business drivers within the company;
• areas of risk which the company does not adequately manage and the potential losses that could occur as a result;
• the company’s risk management strategies;
• current or planned changes to the company’s structure (e.g. mergers, acquisitions).
Source-Business Insights- Risk Management - new challenges and solutions- By Graham Buck and Paul Riches
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