RISK MANAGEMENT IN THE COMPANIES
Journal Title: EMC Review: Časopis za ekonomiju i tržišne komunikacije - Year 2015, Vol 5, Issue 2
Abstract
The risk is a future and uncertain event, that is, from the standpoint of the company, an event that can cause damage. It is therefore of great importance to the companies to properly assess the risk, to determine its type, the consequences of the realization of the risk, as well as methods of protection against this risk. The realization of the risk depends, primarily, on its nature. The risk can be multiplied, making it harder to control. Risk controland possibility to infl uence of its realization is one of the most complex operations, not just for insurance companies, but, also, for all subjects in society. Th e risk always threatens, no matter what consists and when and where it can achieve. It is very hard to defi ne the types of risk, considering that risks have more characteristics. But the most important is to determine whether a risk, that is, its realization may be transferred to another person (insurer) or not. In other words, does one company has suffi cient funds to “cover” the realization of a risk or not. The companies possess assets that may be suffi cient that the individual risks „reduce“. Also, many of the risks can be controlled or eliminated by the changing of activities or by reducing the number of employees, etc. In any case, the paper points out three methods of risk control by a company - a legal entity. Th ese are: the method of damage control, the method of funding of damages and method of internal reduction of risk. On the other hand, risk control will be implemented successfully if company choose the way, that will lead to eff ective risk management. These methods are diff erent depending on whether the risk is controlled by a company or any other person. Th ese methods are: a) risk management by the company, which it does by creating its own funds; b) transfer of risk to the insurance company, which is the simplest way; c) creating conditions by the insurance companies that successfully cover risks; and d) transfer of part of the risk between the co-insurers or insurers to reinsurers, respectively, transfer of insurance portfolio. As we can see, when we talk about risk management must, we must, also, talk about the conclusion of an insurance contract of these risks. Also, this paper pays attention to the Directive EU „Solvency II“. Th e challenge for European insurance companies is the EU Directive no. 2009/138/EC, which is commonly known as “Solvency II”. In the light of new changes of the regulations, the insurers are faced with two problems. On the one hand, they must ensure full compliance with the Solvency II Directive, while, on the other hand, there are the new business and fi nancial opportunities, that the new circumstances and new regulation in this area brings. Given the complexity and importance of the new regulation, it will be diffi cult in the short term identify and exploit the new strategic opportunities. However, if we look at long term, the quality goal setting and successful implementation of risk management system will enable a big step forward compared to the competition, in relation to other insurance companies, as well as in relation to the insurance market as a whole. This, after all, requires a Solvency II Directive. The deadline for implementation of this Directive is January 2016. In conclusion, the author states that for one company, first of all, it is essential the correct defi nition of risk management methods.
Authors and Affiliations
Vladimir Čolović
Keywords
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