Risk management in reinsurance
Interest in risk management has increased in recent years. many studies concerning risk and insurance theory have appeared. These have been aimed at defining the risks and finding the most suitable methods to control them and their effects as well as minimizing the costs. The interest of the reinsurer in risk management, and his success in limiting his risks and hence in increasing his insuring capacity and achieving a balance in his portfolio is an important starting point to overcome many of the problems which confront the insurance and reinsurance markets. The capacity of the different insurance corporations and the markets as a whole depends on the capacity of the reinsurance markets to provide the essential covers for risks which are accepted by the insurance companies. The need to increase the capacity is not restricted only to the developing insurance markets, but it has become more important for the developed markets because of the nature of risks resulting from scientific advancement and changes in the economic, financial and social environment of insurance enterprises. This study concerns the general framework of risk theory, risk definition, classification and measurement and of methods of risk management in order to allow the theory and its applications to be introduced into the various fields which are beset by risk. The study reviews the division and analyses of the risks which are confronted by the reinsurer, whether they are related to each type of primary risk or to reinsurance risk or to the political, social and economic elements in the environment. It also studies and analyses the methods which are already used, and those which can be used by the reinsurer in managing the risks which confront him. The study concentrates on the technical aspects of the contractual and management devices as well as the underwriting and retention decisions as the most effective methods of managing these risks. This is done by studying the factors which affect the decisions as indicated by a quantitative survey by the researcher.