Jul 2026· Journal of Business Economics· 0 citations· 19 references
Abstract
This paper provides an overview of risk management in the insurance sector, combining theoretical principles with practical and regulatory perspectives. Starting with a simplified model of risk pooling, we demonstrate how diversification creates benefits for risk-averse policyholders. In a next step, we present a simple model to illustrate the main goal of quantitative risk management: The optimization of performance subject to a variety of constraints rather than a pure minimization of risks. We continue by reviewing the main fields of application of risk management and elaborate on the rationality of risk management due to market frictions. Finally, our discussion of solvency regulation and alternative policyholder protection mechanisms highlights the trade-offs between financial resilience, costs, and market efficiency. Overall, the paper demonstrates that, in addition to being a regulatory requirement, risk management in insurance is a strategic instrument for balancing policyholder protection, economic efficiency, and long-term sustainability.
Risk is inherent in all business activities. The discipline of Risk Management and Insurance enables organizations to anticipate, evaluate and respond to uncertain events that can adversely affect objectives. This paper explores the conceptual frameworks of risk management, the role of insurance as a risk-financing mechanism, the integration of risk assessment tools, and current trends shaping the field. Through theoretical analysis and practical examples, the research highlights how effective risk management and insurance strategies improve business resilience, competitive and long term sustainability.
Amardeep B. Bajpai· International Journal of Adv...· 0 citations
This article studies a dynamic corporate risk management problem by considering the decision-making of risk-averse managers who exert costly effort and select project risk. We study how a Value-at-Risk (VaR) constraint affects managerial decisions and the distribution of firm value when the manager's objective is non-concave with a fixed salary and options. By the concavification technique, we analyze the optimal terminal firm value on the concave envelope of the objective function. Applying the quantile formulation and the martingale approach, we can derive explicit solutions for optimal effort, terminal firm value, and project choice. The optimal terminal firm value can be divided into nine cases by carefully discussing the choices of VaR floor and tail probability. Compared with the benchmark case, we find that a VaR manager will smooth terminal firm value across states, reducing it in good states while supporting it in adverse states. Moreover, a VaR requirement generally improves downside protection and reduces bankruptcy probability when the VaR floor is low or moderate. However, when the VaR floor is sufficiently high, it can increase bankruptcy probability and induce gambling-for-recovery behavior in adverse states. Our sensitivity analysis indicates that greater managerial effort uniformly improves firm value. Moreover, more incentive options make managers more responsible, leading to a smoother terminal firm value across states. In contrast, a high fixed salary makes the manager less responsible and ultimately causes a more dispersed firm value.
Option instruments are frequently used in corporate finance to reduce the risk of a decline in price asymmetrically and do not restrict the upward movement of the price. Research on the application of options in enterprise risk management. The above options are relatively more suitable for handling the firms' uncertain exposures and non-linear risks and demand for strategic flexibility. Options are relatively precise hedging instruments for foreign exchange risk, commodity price risk and interest-rate risk, etc., and can be used to manage equity exposure of a company. Based on the study of corporate option use and real options and option incentives, the four dimensions of value in this paper are downside protection, flexible hedging, strategic real-option value, and risk governance. In short, options are for speculation; however, if they are well-managed by the company, the risk can be reduced and firm value increased at the same time.
Zi-Yuan Peng· International Journal of Fin...· 0 citations
Valuation Adjustment Mechanisms (VAMs) come with many questions as to their enforceability, risk allocation and means of dispute-resolution under the current regulatory frameworks for private equity investments. The study dissects how the risk is allocated between the investors and the portfolio companies, key contractual features and maps the practical dispute-resolution routes by analysing selected case studies and a relevant regulatory guidance. The paper also recommends clause designs for the actionable sections of the paper and due diligence checklist for equity investments for better risk management and compliance. The results shed light on the design decisions of VAMs in the context of regulatory development, point out some of the typical challenges in terms of enforceability, and provide practical recommendations to practitioners, investors and regulators. The contribution is in the idea and the execution of connecting theory and practice, turning regulatory understanding into drafting guidance and due-diligence processes, and thus improving clarity, predictability and resilience in PE transactions.
Rui Li· Advances in Economics, Manag...· 0 citations
Introduction. Against the backdrop of ongoing changes in the financial and economic environment, growing uncertainty, digital transformation, and globalization, risk management is emerging as a key factor for business resilience and competitiveness. Traditional risk management approaches often prove insufficiently flexible in current turbulent conditions, underscoring the need for a transition towards comprehensive and adaptive systems capable of rapid response to new challenges.
Goal. The article aims to develop and substantiate the advantages of using the Dynamic Risk Integration Model (DRIM) in organization risk management system. The banking sector was identified as the main application area for the model, though it demonstrates broad adaptation potential across other economic sectors and management levels. The key objective of the model is to establish an integrated risk management system for financial institutions and real-sector enterprises, improving the precision of strategic risk assessment.
Materials and methods. The research was based on a comparative analysis of various risk management techniques and standards, including COSO ERM, ISO 31000, FAIR, System Dynamics, PMBOK, and SCRUM. By integrating the core principles and practices of these methodologies, the DRIM model was developed. It combines quantitative and qualitative analytical approaches, strategic planning, and operational flexibility.
Results and discussion. The effectiveness of comprehensive approaches is confirmed by the practices of leading Russian companies. DRIM represents a holistic model incorporating advanced practices from modern risk management standards. The model enables not only the identification and assessment of risks but also the integration of analysis results into the strategic goals of the company. It demonstrates versatility and potential for adaptation to various management levels and industry sectors, including financial services and information technology.
Conclusion. DRIM combines modern risk management methodologies, including adaptability, strategic planning, and quantitative analysis. It optimizes the overall system for managing banking risks, enhancing the resilience and competitiveness of banks in an unstable environment. DRIM encompasses methods for identifying, assessing, and managing banking risks, considers qualitative and quantitative aspects, and can be based on the use of machine learning, AI, and big data processing, making the system flexible to changes.
E. Grinko, D. V. Ivatin· Вестник Северо-Кавказского ф...· 0 citations
Subject. Risk management strategies in mergers and acquisitions (M&A) transactions in accordance with the international standard ISO 31000.
Objectives. To examine the transformation of risk management under the influence of sanctions, technological turbulence, growing ESG requirements, and increasingly complex regulatory regimes, with particular attention to extended due diligence as the core of modern risk minimization, as well as to insurance and contractual mechanisms for risk transfer, including W&I insurance, escrow, indemnity clauses, and SPV structures.
Methods. Structural‑functional analysis, comparative analysis, case method, content analysis, and the expert evaluation method were applied.
Results. The study covers three key strategies — risk avoidance, risk minimization, and risk transfer — and evaluates their application under conditions of high macroeconomic and geopolitical uncertainty in 2023–2025. It is shown that the avoidance strategy becomes critically important in the presence of unregulated or catastrophic risks, including sanctions and regulatory restrictions, ESG non‑compliance, technological incompatibility, and cyber threats. The Russian practice of 2022–2025 is analyzed as a special case of heightened turbulence: divestment transactions by foreign investors, limited guarantees, a high burden on buyers, and the adaptation of risk transfer instruments amid the absence of some international institutions.
Conclusions. Effective risk management in M&A requires a combined application of all three ISO 31000 strategies, ensuring transaction resilience, predictable integration, and capital protection.
M. Chernyshev· Finance and Credit· 0 citations
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