3. 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.
4. 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.
5. Country or Political Risk: This is the risk that
arises in connection with uncertainty
about a country’s political environment
and the stability of its economy.
6. RISK MANAGEMENT
The process of identification, analysis and
either acceptance or mitigation of
uncertainty in investment decision-making.
8. Cost Of Risk
Components of 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
9. 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
10. Uses of RMIS
For reporting
For claim adjustment process review
For examination about reasons of
accidents
11. Process Of Risk Management
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
12.
13. Methods Of Risk Management
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
