The principles of risk management include top level involvement, culture of accountability, risk prevention, appropriate control, discipline and forecasting negative events. Investment and accountability are important factors of risk management.
Risk management is embedded in insurance industry from the date of proposal to the final payment of claims. After sale services reveal the techniques of risk management. It reveals the investment process in Industry itself discovers the principles of risk management.
The senior managers have knowledge of risk and risk management technique. There are set procedures e.g., LIC has agents manuals to guide them how to identify the risk and manage it properly. The L.I.C. provides oversight integration, coordination and consolidation of corporate functions, many companies has a separate department of risk management.
The responsibility vested on the executive reduces the risk and forces them to manage risk. There are rating agencies (Tariff Advisory Committee) analysts, surveyors etc. who evaluate the risk.
Management is responsible for identifying the risk setting the risk limits implementing process to back and identify new risks. Applying constant testing and monitoring. The agents, development officers and branch managers are responsible for risk evaluation and rate fixation. They sell right policy to right person.