Assessment of Financial Risks in the Insurance Sector Using the Sensitivity Analysis

Conference paper
Part of the Springer Proceedings in Business and Economics book series (SPBE)

Abstract

Companies in the modern dynamic market environment must undergo various types of risks. The importance of each type of risk is different for each specific company depending on the nature of its business, the regional scope, markets of operation, corporate organizational structure, etc. The risk management function within the company is carried out in respect of financial risks, operational risks and legal risks. Financial risk comprises market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk. The primary objectives of the financial risk management function are to establish risk limits and then ensure that exposure to risks stays within these limits. In the insurance sector, the risk management programme is focused on the unpredictability of situations in the financial markets and seeks to minimize any potential adverse effect on the financial results of insurance companies. The contribution illustrates and explains one of the most common and simplest methods of the risk assessment, the sensitivity analysis, in a practical example using the Slovak insurance company.

Notes

Acknowledgements

The contribution is an output of the scientific project VEGA 1/0428/17 Creation of new paradigms of financial management at the threshold of the twenty-first century in the conditions of the Slovak Republic.

References

  1. Annual report of Komunálna poisťovňa. (2015). Vienna Insurance Group, Slovakia.Google Scholar
  2. Bartošová, V. (2007). Determinants of firm’s capital structure and their identification in practice. Ekonomiczne problemy usług, 8, 9–14.Google Scholar
  3. Bartošová, V., Majercak, P., & Hraskova, D. (2015). Taking risk into account in the evaluation of economic efficiency of investment projects: traditional methods. Procedia – Economics and Finance, 24, 68–75.CrossRefGoogle Scholar
  4. Cisko, S., & Kliestik, T. (2013). Finančný manažment podniku II. EDIS, Žilina.Google Scholar
  5. Crouhy, M., Mark, R., & Galai, D. (2000). Risk management. New York: McGraw- Hill.Google Scholar
  6. Fabozzi, J. F., & Peterson, P. (2003). Financial management and analysis. Hoboken: Wiley.Google Scholar
  7. Jilek, J. (1999). Finanční rizika. Praha: Grada Publishing.Google Scholar
  8. Jorion, P. (2003). Financial risk manager. Hoboken: Wiley.Google Scholar
  9. Kliestik, T., Musa, H., & Frajtova-Michalikova, K. (2015). Parametric methods for estimating the level of risk in finance. Procedia – Economics and Finance, 24, 322–330.CrossRefGoogle Scholar
  10. Markovic, P. (2007). Manažment finančných rizík podniku. Iura Edition, Bratislava.Google Scholar
  11. Misankova, M., Valaskova, K., Cug, J., & Zvarikova, K. (2014). Comparison of selected measures of financial risk. In Management innovation and business innovation:2nd international conference on management innovation and business. Singapore Management and Sports Science Institute, 8–9 Dec 2014.Google Scholar
  12. Spuchlakova, E., Frajtova-Michalikova, K., & Mirtus, M. (2014). Credit risk measurement. In Economics and social science: 2nd international conference on economics and social science. Information Engineering Research Institute, 29–30 July 2014.Google Scholar
  13. Svabova, L., & Durica, M. (2015). Základy poistnej matematiky. Dolis, Bratislava.Google Scholar
  14. Szabo, L., Vrcholova, T., & Dubovicka, L. (2005). Manažment rizika. Ekonóm, Bratislava.Google Scholar

Copyright information

© Springer International Publishing AG, part of Springer Nature 2018

Authors and Affiliations

  1. 1.University of Zilina, Faculty of Operation and Economics of Transport and CommunicationsZilinaSlovak Republic

Personalised recommendations