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Risk-management

The risk management is the cornerstone purposeful search and the organization of work on decrease in a risk degree, art of receiving and increase in income (a prize, profit) in an uncertain economic situation.

The ultimate goal risk management corresponds to target function of an entrepreneurship. It consists in receiving the greatest profit at a ratio of profit and risk, optimum, acceptable for the entrepreneur.

Risk-management represents risk management system and the economic, more precisely, financial relations arising in the course of this management. Risk-management includes strategy and tactics of management.

The strategy of management is understood as the direction and a method of use of means for achievement of an effective objective. To this method there corresponds a certain set of rules and restrictions for decision-making. Strategy allows to concentrate efforts on the versions of the decision which are not contradicting the accepted strategy, having rejected all other options. After achievement of an effective objective strategy as the direction and means of its achievement stops the existence. The new purposes set a task of development of new strategy.

Tactics is concrete methods and acceptances for achievement of an effective objective in specific conditions. A problem of tactics of management is the choice of an optimal solution and the methods which are most acceptable in this economic situation and acceptances of management.

Risk-management as a management system consists of two subsystems: the operated subsystem (object of management) and the operating subsystem (the subject of management).

Schematically it can be introduced as follows:

Object of management in risk management are the risk, risk capital investments and the economic relations between economic entities in sales process of risk. The relations between the insurer and the insurer, the borrower and the creditor, between entrepreneurs (partners, competitors), etc. belong to these economic relations.

The subject of management in risk management is a special group of people (the financial manager, the insurance specialist, the acquirer, the actuary, the underwriter, etc.) which by means of various acceptances and methods of managerial influence performs purposeful functioning of an object of management.

Process of impact of the subject on object of management, i.e. management process, can be performed only on condition of circulation of a certain information between the managing director and operated by subsystems. Management process irrespective of its specific contents always assumes receiving, transfer, processing and use of information. In risk management obtaining reliable and sufficient information in these conditions plays a major role as it allows to make the specific decision on actions in the conditions of risk.

Information support of functioning risk management consists of any and the type of information: statistical, economic, commercial, financial, etc.

This information includes awareness on the probability of this or that insured event, an insurance event, availability and size of the goods demand, on the capital, financial stability and solvency of the clients, partners, competitors, the prices, rates and tariffs, including for services of insurers, about insurance conditions, about dividends and percent, etc.

Any decision is based on information. The quality of information is important. The information is more indistinct, the decision is not more certain. The quality of information has to be estimated at its receiving, but not by transfer. Information grows old quickly therefore it should be used quickly.


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