Articles on Risk Management

Risk Management – A Basic Understanding

Literally speaking, risk management is the process of minimizing or mitigating the risk. It starts with the identification and evaluation...

Benefits of Risk Management

Risk management is a significant expense for any company. There are several skilled professionals that need to be recruited and...

Principles of Risk Management

Various organizations have laid down principles for risk management. There are risk management principles by International standardization Organization and by...

Understanding the Risk Management Process

In order for businesses to run smoothly, risks need to be identified and managed. This is especially true in our...

Risk Identification and Assessment – HR Issues

The organizational game is changing fast these days. The HR manager today acts as an associate with line management to...

Various Aspects of Risk Management

What does risk management mean? Is it just identification, assessment and planning and controlling social, economic or physical threat to...

Approaches to Risk Management

There is a common misconception about risk management that the goal of risk management is to completely eliminate the risk...

Risk Management Policy

The policy of risk management is unique to every organization. Practices that may be considered acceptable in one organization may...

Commonly Used Measures of Risk

The discipline of risk management has been evolving through the years. As a result, the process of measuring risk and...

How to create a Risk Management Plan?

Any project immaterial of the size of the same carries a lot of risks, which may be financial, non-financial, legal...

Evaluation of a Risk Management Plan

A risk management plan can never be perfect. However, the degree of its success depends upon risk analysis, management policies,...

Risk Treatment – Risk Response Planning

A risk treatment is mandatorily a part of an effective risk management plan. The plan here means how you respond...

Role of HRD in Risk Management

These days, the importance of Human Resource Management can not be neglected especially when companies are operating in such a...

Enterprise Risk Management

The CAS committee on Enterprise risk management has given the following definition of the same – ‘The discipline by which...

Practical Considerations in implementing Enterprise Risk Management

Once an organization decides to go for Enterprise Risk Management, the challenge is the implementation. At the ground level there...

Risk Management and Stock Market

In stock market there is strong relationship between risk and return. Greater the risk, greater the return generally! In financial...

Outsourcing Risk Management Program/Outsourcing Human Capital Consulting

Managing risk efficiently and effectively can be a determining factor in the overall success of any organization. Most of the...

Risk Management as a Profession

Risk management has evolved from being just a discipline to a full-fledged profession that lots of people are choosing these...

Anticipating and Mitigating Organizational Risks in the Digital Age

Anticipating and Mitigating Organizational Risks in the Digital Age Every era brings with its own share of risks for organizations...

The Economic Costs of MeToo

The MeToo movement has caused ripples across the entire world. The fact that some of the most prominent and powerful...

Automated Claims Processing

Claims processing is probably the most important function for any insurance company. This is because this process is where the...

Challenges in Global Insurance And International Claims

Multinational organizations have become extremely powerful entities in the 21st century. There are many companies which have business interests that...

Conflicts of Interest in the Insurance Business

Conflict of interest scenarios are common in businesses where multiple parties are involved. In many cases, these conflicts are small...

The Cost Structure in the Insurance Industry

Insurance is one of the most regulated industries in the world. Also, there are multiple players which offer every type...

How Drones Will Impact the Insurance Industry?

The military application of drones is well known across the entire world. However, of late, civilian and commercial applications of...

How is Health Insurance Funded?

Throughout the world, if you ever want to buy a product or service, you have to pay up for it....

How Stock Market Volatility Affects Insurance Companies?

The average consumer believes that most of the money that insurance companies collect in the form of premium ends up...

Insurance Agents vs. Insurance Brokers

Most individuals buy insurance policies through insurance agents. These insurance agents are often individuals who work on behalf of one...

The ABC’s of Insurance Fraud in India

India is one of the biggest markets for insurance companies across the world. However, it also needs to be understood...

Technological Advances in the Insurance Industry

The Fintech revolution has startled many industries. Insurance is one of the industries that have been affected. A large percentage...

The Basics of Unemployment Insurance

The modern multinational company is global in nature. This means that a lot of times work is sent overseas because...

The Pros and Cons of Unemployment Assistance and Why it Matters in the Present Times

What is Unemployment Assistance and Why it Matters in the Present Times World over, there are many countries that provide...

The Role of Insurance in #MeToo Movement

In 2017, Forbes magazine named #MeToo movement as the “person of the year.” This is because the #MeToo movement has...

Why the Flood Insurance Market should be Privatized?

In the United States, the government of the United States is the biggest player in the flood insurance industry. This...

Basics of Pet Insurance

People in the developed world have an affinity for pets. This is the reason why two-thirds of American households, i.e....

Challenges Facing Cryptocurrency Insurance

The market for cryptocurrency has exploded in the recent past. The past couple of years witnessed a major rise and...

Evolution of Insurance Regulation

The general public is not very fond of the financial services industry. Whenever any crisis breaks out, the financial services...

Food Delivery Apps and Insurance

It is no secret that consumers are leading extremely busy lives. In many families, both the partners are working and...

How Does Captive Insurance Work?

Insurance companies are very different from other companies. Other companies have to pay upfront for buying raw materials. They get...

On-Demand Insurance

The millennial consumers are remarkably different from their predecessors. This is true in the sense that whilst earlier generations preferred...

Reinsurance vs. Double Insurance

In the previous article, we understood what reinsurance is. We also studied the various types of reinsurance contracts that are...

Solvency Regulations in the Insurance Industry

In the previous article, we have explained why regulation is important for the insurance industry. We have also understood how...

Terrorism and Insurance

Terrorism is a grave risk that is being faced by the entire world. When an event related to terrorism occurs,...

The Basics of Microinsurance

The global insurance industry is at a strange crossroad. On the one hand, the market is completely saturated in countries...

The Basics of Reinsurance

Insurance is a tool which helps individuals protect themselves and diversify their risks. The concept of insurance is based on...

Types of Captive Insurance Companies

In the previous article, we have studied about the concept of captive insurance companies. We have also enumerated the various...

What is P2P Insurance?

P2P insurance, short for peer to peer insurance, is a relatively new form of insurance which has made its way...

How Risks Affect Companies Providing Financial Services

Risk management, as a concept, is studied and implemented across all industries. Over the years, even companies with the most...

Risk Management Information System

There is an old saying in management that “whatever gets measured gets managed”. This is truer in the case of...

Disadvantages of Risk Management Information Systems

Technology has disrupted the entire business world and the field of risk management is no exception. All across the world,...

The Known-Unknown Classification of Risk

The entire subject of risk management is based on the ability of the manager to identify, value, and then mitigate...

Operational Risk: Definition and Drivers

In the previous few articles, we have studied about the concepts of risk management in general. However, merely understanding general...

How Regulations Have Affected Operational Risk?

Companies all over the world today acknowledge operational risk as a serious threat to the survival of their organizations. This...

Identification of Operational Risks

The fundamental principle of operational risk management is to ensure that all operational risks have been considered and decisions have...

How to Identify Operational Risks

In the previous article, we discussed about the top-down and bottom-up approach which has been created to identify risks. In...

Using Internal Loss Data to Mitigate Operational Risks

The modern approaches to risk management are data-driven. There are four basic steps to this approach which we will study...

External Loss Data in Operational Risk Management

In the previous article, we studied how a firm can collect internal loss data about the adverse events that take...

Risk and Control Self-Assessment (RCSA): What is it, What are the Benefits, and How is it Done?

Risk and control self-assessment (RCSA) is an internal procedure used to identify, assess, and mitigate operational risks within a company.1...

Scenario Analysis in Risk Management

Scenario analysis is the third pillar of the framework suggested by the Bank of International Settlements in their Basel norms....

Key Risk Indicators

The fourth and last step for risk management suggested by the Bank of International Settlements in its Basel Norms is...

Basel Approaches in Operational Risk Management

The Bank of International Settlements (BIS) has created the Basel norms so that the operational risk measurement and mitigation are...

The Basel Risk Categories

The Basel guidelines are the gold standard when it comes to identifying and managing operational risks. This is the reason...

Cause Categories in Operational Risk Management

The definition of operational risk has been narrowed down. This has helped organizations better manage their operational risks. All operational...

Loss Distribution Approach

A loss distribution approach is a common approach followed by risk management practitioners in order to identify and evaluate the...

The COSO Framework for Internal Control

Internal frauds are a big part of the operational risk faced by any organization. This is truer of multinational companies...

Mistakes to be Avoided While Building a Risk Management System

There are several books that have been written about the steps that need to be undertaken in order to be...

Credit Rating Terminology

Credit rating is an important and almost central part of the overall credit risk management function in any organization. Every...

Types of Exposures to Determine Credit Limit

The credit limits concept forms the root of the credit risk management practice at most organizations around the world. Financial,...

Types of Credit Events

The purpose of credit derivatives is to make sure that the interests of the buyers of protection are secured if...

Active Credit Portfolio Risk Management

The business of banking has witnessed a lot of changes in the past few years. It would be safe to...

Metrics to Measure Credit Risk

In order to manage any type of risk, it becomes important to measure it. Now, credit risks manifest in different...

Credit Derivatives: An Introduction

Credit derivatives are the most important financial innovation in the field of credit risk management. These derivative instruments have been...

Credit Linked Note

Structured finance products have proliferated the financial markets. There are several derivative products that have been created with the sole...

How do Credit Default Swaps Work?

Credit derivatives were created in order to transfer the credit risk inherent in an instrument from one party to another...

Why are Credit Default Swaps Dangerous?

When credit default swaps first found their way into the global market, they were hailed as being a great invention....

Total Returns Swap

Credit default swap is the most commonly known derivative which is based on swaps. However, it is not the only...

What are Collateralized Debt Obligations and How do they Work?

Collateralized debt obligations (CDOs) are a very important and popular type of credit derivative. With the growth in structured finance,...

Collateralized Debt Obligations: Advantages and Disadvantages

In the previous article, we studied about how collateralized debt obligations (CDOs) are derivative instruments that have been built on...

Mark To Market Accounting

There have been many advances in the field of credit management. Mark to market accounting is one such innovation. Mark...

What are Recovery Rates? – Different Types of Recovery Rates

The Basel norms suggest that organizations assess their own credit risk internally. In order to do so, they are required...

Netting, Close Out, and Acceleration

Netting is a procedure that is commonly used by organizations all over the world to reduce their counterparty credit default...

Expected Default Frequency (EDF)

Expected default frequency (EDF) is an important metric to be considered during the mitigation of credit risk. It is commonly...

Expected Default Frequency: Advantages and Disadvantages

The expected default frequency (EDF) model is widely used across the world in order to effectively manage credit risk. In...

Altman’s Z Score Model

Academicians and practitioners from all over the world have been tried very hard to come up with a model which...

Unexpected Loss and Economic Capital Buffer

In the previous articles, we have seen how we can use exposure at default (EAD), loss given default (LGD), and...

Stress Testing in Credit Risk Management

In the previous article, we have already studied how expected and unexpected losses are calculated using statistical techniques. However, there...

Provisioning in Credit Risk Management

The primary purpose of credit risk management is to avoid credit losses i.e. credit events that negatively impact the cash...

How Corporate Governance Impacts Credit Risk

Corporate governance can have a huge impact on credit risk. This is because corporate governance is the set of rules...

Exit Strategies In Credit Risk Management

Firms often give loans or extend credit over extended periods of time. The credit extended may continue for years and...

What is Market Risk? – How its Measured and its Sources

The global financial system is connected to markets. Markets are where companies go to if they want to raise funds....

Why is Market Risk Management Important?

The concept of market risk has always been around ever since financial markets have existed. However, the measurement and management...

Introduction to Value At Risk (VaR)

The concept of value at risk (VaR) is closely connected with the concept of market risk mitigation. This is why...

The Three Types of Value at Risk (VaR)

The value at risk (VaR) model is a mechanism of calculating the maximum probable loss from a given data set....

Marginal, Incremental and Component Value at Risk (VAR)

In the previous articles, we have studied how the value at risk (VaR) models should be used to calculate risks....

How Value at Risk (VaR) is Implemented?

In the previous articles, we have discussed the details about the concept of value at risk (VaR) as well as...

Backtesting Value at Risk (VaR)

Merely creating a model which calculates the value at risk (VaR) i.e. the greatest possible loss that a company can...

Advantages of Using Value at Risk (VaR) Model

Value at Risk (VaR) is the most prominently used methodology when it comes to gauging and mitigating the market risk....

Disadvantages of Using the Value at Risk (VaR) Model

The value at risk (VaR) model has several advantages, which is why it is used widely in different parts of...

How Margins Are Calculated Using Value at Risk (VaR)

There are many organizations in the world that have billions of dollars invested in the financial markets. Most of these...

Market Risk Limits

The management of market risk is very difficult because the value of financial instruments traded in the markets changes very...

What is Tail Risk and How to Manage it

Most of the literature in market risk management is dedicated to explaining the methods which are used in the management...

The Upside of Market Volatility

The volatility present in the market is always mentioned in a negative manner. However, if one looks carefully at the...

Relationship between Volatility and Risk

Market risk and volatility are two terms that are heard a lot by many risk management professionals. To the layman,...

Importance of Data Quality in Risk Management

The overall risk management of a firm is largely based on statistical measures. This is because most of the models...

Impact of Using Poor Quality Data and Metrics to Measure Data Quality

In the previous article, we have understood why data quality is important in the field of risk management. We also...

Enterprise Risk Management (ERM) vs Traditional Risk Management

Enterprise risk management (ERM) is a buzzword that has been doing rounds in the risk management field for the past...

Benefits of Enterprise Risk Management

In the previous article, we have discussed the concept of enterprise risk management (ERM) and how it is different from...

Corporate Risk Governance

Undertaking financial and non-financial risks is the basic job of any business organization. In fact, profit is considered to be...

International Risk Governance Committee (IRGC) Framework

There are several organizations in the world that follow their very own risk management practices. However, there are some practices...

Failure of Market Risk Management

Any firm that sets up a risk management department wants to ensure that the department works efficiently and effectively. Just...

Mistakes to Avoid in Risk Management

The field of risk management has undergone a sea of change in the past few decades. At one point in...

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