Papers by Dr Sonjai Kumar
Insurance Times, 2024
This article discusses the challenges of ERM implementation within the Indian insurance industry.... more This article discusses the challenges of ERM implementation within the Indian insurance industry. This study is a part of PhD research on ERM in the insurance sector in India.
While there is widespread enthusiasm for the application of Gen AI, which is helping to ease huma... more While there is widespread enthusiasm for the application of Gen AI, which is helping to ease human workloads, both the user and the suppliers of such models should be aware of the risks. When the user is utilizing, the results generated through such applications, they should double-check the content and ensure that it is trustworthy and does not breach risks mentioned by the NIST. Similarly, the producers of such models should be self-regulated to ensure that these applications serve human needs and do not erode their confidence.
PRMIA, 2024
Since regulators realized that bank failures are not all due to credit and market risks, or even ... more Since regulators realized that bank failures are not all due to credit and market risks, or even their interactions with other risks, they have started to focus on the root (internal) cause: risk culture. This article delves into how regulators stack up when defining and addressing risk culture, and how they encourage better behavior from banks.
This article focuses on the existing gap between academia and industry. Academicians can address ... more This article focuses on the existing gap between academia and industry. Academicians can address industry problems using academic research. The article uses examples from the risk management field to address this point.
Journal of Risk Management in Financial Institutions,, 2024
The research aims to describe the state of enterprise risk management (ERM) in the insurance sect... more The research aims to describe the state of enterprise risk management (ERM) in the insurance sector. It highlights emerging trends in the application of risk management in the insurance sector and thereby reports the prominent research gaps and new avenues for research in ERM. The research adopts a systematic literature review (SLR) approach, using 187 research papers spanning 44 years (1977–2021). The paper identifies the fact that most ERM and insurance sector research is performed in North America and Europe, while developing economies in Asia and Africa lag. The paper establishes a three-way relationship between ERM, risk management (RM) and risk-based capital (RBC) where RM is a subset of ERM and RBC is a driver of ERM. The research shows that very few studies are conducted on risk culture, three lines of defence and the role of chief risk officers. The determinants of ERM identified are board, firm size, audit and risk management committee and corporate governance. The determinants identified for firm value are return on assets, return on equity, profit, Tobin's Q, among others. This research provides a way for academicians, practitioners and policy makers to design effective strategies for implementing ERM in organisations.
Life insurance and the banking sector are the two core sectors where customers keep money with th... more Life insurance and the banking sector are the two core sectors where customers keep money with the trust that their money is safe. Both sectors protect the customer's money. This article looks at both the assets and liabilities of the banking and insurance sectors to find out the similarities and differences. The article also looks at the risks of both sectors to find whether there are opportunities for cross-pollination of people working from both sides.
Risk reporting is the last leg of the risk management process, which is also recommended by all r... more Risk reporting is the last leg of the risk management process, which is also recommended by all risk management standards. The purpose is to inform the stakeholders about the risk status and take mitigating actions.
Over the last two decades, the way risks are materialised, it seems that enough oversight is not given on the reported risks. Whether the risks are from any organisation or for any country or even at a global level, there should be ownership of the risk so that people can come to know who has missed the risks.
Such ownership of the risks is made public to fix the responsibilities. In the risk management process, the actions are in the hands of risk owners, so the role of risk owners is paramount.
Interconnected risks are difficult to recognize before the initial event but are apparent with hi... more Interconnected risks are difficult to recognize before the initial event but are apparent with hindsight. While risk managers can only hope to become better at spotting warning signs, they can use previous interconnected risks to their advantage in the form of scenario analysis. Constructing scenarios where multiple risks occur helps organizations prepare for the next big event, such as climate change, and understand its impacts.
There is a clear benefit to adopting ERM through the value addition in the firm performance and a... more There is a clear benefit to adopting ERM through the value addition in the firm performance and as such, there should be enough incentive for shareholders to adopt ERM practices proactively rather than waiting for a regulator’s push. There also still remains a need to bridge the gap between the academic and practising world, as much of the research on the academic side can be used on the practitioner’s side.
With hindsight, any financial institution’s failure is easy to investigate. However, the challeng... more With hindsight, any financial institution’s failure is easy to investigate. However, the challenging task is anticipating risk and taking appropriate mitigating action before the risk crystallises.
This paper was presented in the 22nd Global Conference of Actuaries. The presentation identifies ... more This paper was presented in the 22nd Global Conference of Actuaries. The presentation identifies the challenges in the implementation of ERM in the insurance sector in India, suggestions for improvement and opportunities.
Risk culture is the engine to drive the entire enterprise risk management (ERM) program in any or... more Risk culture is the engine to drive the entire enterprise risk management (ERM) program in any organization and, therefore, is of paramount importance to be a focus point.
Australian Prudential Regulation Authority (APRA) has greatly focused on the development of risk culture in the banks and insurance companies over the last couple of years. However, it is difficult to measure risk culture, and thus a comparison with peer organizations is even more challenging. This article discusses the importance of risk culture and what steps APRA takes to enhance the risk culture in Australian financial institutions.
Climate risk impacts the insurance industry on both sides of the balance sheets. On the one hand,... more Climate risk impacts the insurance industry on both sides of the balance sheets. On the one hand, rising weather-related claims are affecting the liability side. At the same time, there is an increasing expectation from investors, shareholders, customers and other stakeholders for insurers to divest from investments in carbon-intensive industries to low-carbon industries that may impact return on the assets side of the balance sheet.
The Insurance industry could potentially play a greater constructive role in mitigating climate r... more The Insurance industry could potentially play a greater constructive role in mitigating climate risk by aligning with entities that scrupulously incorporate environmental, social, and governance (ESG) aspects in their business philosophy.
This article critically analyses the development of health insurance in India where on the one ha... more This article critically analyses the development of health insurance in India where on the one hand, 61% of India's population is covered by government health insurance schemes; however, in the premium term, their contribution is only 11%. Further, public sector general insurance companies are doing the bulk of the health insurance business, including group insurance and government health insurance schemes. On the other hand, the individual health insurance premium is 20% of the total premium; out of this, 73% is contributed by standalone health insurance companies.
There’s no doubt that the widespread introduction of autonomous vehicles will create an unprecede... more There’s no doubt that the widespread introduction of autonomous vehicles will create an unprecedented shift in modern society. Among the largest adjustment will be felt in the insurance space
This chapter covers details of COSO frameworks that came out in 2004 and 2017; this also covers I... more This chapter covers details of COSO frameworks that came out in 2004 and 2017; this also covers ISO 31000 that came out in 2009 and 2018. The chapter discusses similarities and differences between these frameworks to help understand the fabrics of enterprise risk management. The chapter further explains the concepts of risk appetite, three lines of defense, and risk management policies.
These topics are fundamental to enterprise risk management, which a good risk management professional must know. The examples given are based on my practical working experience in the life insurance sector for over two decades in actuarial and risk management. I would be pleased to receive feedback on the above-given email address.
This third chapter of the course focuses on the importance of strategy and corporate governance. ... more This third chapter of the course focuses on the importance of strategy and corporate governance. Both play a very crucial role in the success of risk management. Most companies in the past have failed due to either poor strategies or not finding enough risks within their strategy. The classic examples are Kodak and Nokia, they could not see the emerging risk to change the strategy based on emerging business model. Strategic risks are long term in nature impacting the business model.
Similarly, risk management on its own cannot perform and be successful without solid corporate governance; risk management will just slip through the cracks of poor corporate governance. Brief cases of Yes Bank, Jet Airways, and Café Coffee Day are discussed to reinforce the importance of corporate governance. For example, when a bank disburses loans through the discussion across the table, then risk assessment cannot work. Similarly, when all the decisions are taken through a central place, the role risk managers are very limited.
A company can survive without risk management but cannot survive without proper corporate governance. Therefore, good corporate governance is a necessary condition for risk management to be successful.
The ‘Internet of Things’ (IoT) refers to the billions of physical devices around the world that a... more The ‘Internet of Things’ (IoT) refers to the billions of physical devices around the world that are currently connected to the internet. How can insurance companies utilise IoT to help better assess risk and enhance customer experience?
This chapter is written to help those new to risk management and who want to understand the funda... more This chapter is written to help those new to risk management and who want to understand the fundamentals of risk management. This chapter is based on my reading of various risk management contents and experience gained over the working period.
The chapter covers the definition of risk, benefits of risk management, principles of risk management, differences between risk management and enterprise risk management, corporate governance, risk management framework, and types of risks.
The insurance and banking sector examples are shared to back the concept.
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Papers by Dr Sonjai Kumar
Over the last two decades, the way risks are materialised, it seems that enough oversight is not given on the reported risks. Whether the risks are from any organisation or for any country or even at a global level, there should be ownership of the risk so that people can come to know who has missed the risks.
Such ownership of the risks is made public to fix the responsibilities. In the risk management process, the actions are in the hands of risk owners, so the role of risk owners is paramount.
Australian Prudential Regulation Authority (APRA) has greatly focused on the development of risk culture in the banks and insurance companies over the last couple of years. However, it is difficult to measure risk culture, and thus a comparison with peer organizations is even more challenging. This article discusses the importance of risk culture and what steps APRA takes to enhance the risk culture in Australian financial institutions.
These topics are fundamental to enterprise risk management, which a good risk management professional must know. The examples given are based on my practical working experience in the life insurance sector for over two decades in actuarial and risk management. I would be pleased to receive feedback on the above-given email address.
Similarly, risk management on its own cannot perform and be successful without solid corporate governance; risk management will just slip through the cracks of poor corporate governance. Brief cases of Yes Bank, Jet Airways, and Café Coffee Day are discussed to reinforce the importance of corporate governance. For example, when a bank disburses loans through the discussion across the table, then risk assessment cannot work. Similarly, when all the decisions are taken through a central place, the role risk managers are very limited.
A company can survive without risk management but cannot survive without proper corporate governance. Therefore, good corporate governance is a necessary condition for risk management to be successful.
The chapter covers the definition of risk, benefits of risk management, principles of risk management, differences between risk management and enterprise risk management, corporate governance, risk management framework, and types of risks.
The insurance and banking sector examples are shared to back the concept.
Over the last two decades, the way risks are materialised, it seems that enough oversight is not given on the reported risks. Whether the risks are from any organisation or for any country or even at a global level, there should be ownership of the risk so that people can come to know who has missed the risks.
Such ownership of the risks is made public to fix the responsibilities. In the risk management process, the actions are in the hands of risk owners, so the role of risk owners is paramount.
Australian Prudential Regulation Authority (APRA) has greatly focused on the development of risk culture in the banks and insurance companies over the last couple of years. However, it is difficult to measure risk culture, and thus a comparison with peer organizations is even more challenging. This article discusses the importance of risk culture and what steps APRA takes to enhance the risk culture in Australian financial institutions.
These topics are fundamental to enterprise risk management, which a good risk management professional must know. The examples given are based on my practical working experience in the life insurance sector for over two decades in actuarial and risk management. I would be pleased to receive feedback on the above-given email address.
Similarly, risk management on its own cannot perform and be successful without solid corporate governance; risk management will just slip through the cracks of poor corporate governance. Brief cases of Yes Bank, Jet Airways, and Café Coffee Day are discussed to reinforce the importance of corporate governance. For example, when a bank disburses loans through the discussion across the table, then risk assessment cannot work. Similarly, when all the decisions are taken through a central place, the role risk managers are very limited.
A company can survive without risk management but cannot survive without proper corporate governance. Therefore, good corporate governance is a necessary condition for risk management to be successful.
The chapter covers the definition of risk, benefits of risk management, principles of risk management, differences between risk management and enterprise risk management, corporate governance, risk management framework, and types of risks.
The insurance and banking sector examples are shared to back the concept.
Risk Response to COVID
Failure of Board
Role of CRO
Changes required in Current policies
Themes from 6 Research papers on COVID and
Corporate Governance
Corporate Governance in the UK
Compensation to improve corporate governance
Evidence from Research papers
Role of Board
Corporate Governance
Risk Management Committee
Risk Culture
Corporate Governance in India and UK
Risk Appetite
Enterprise Risk Management
Corporate Governance
Three Lines of Defense
Risk Appetite statement
Risk Culture
Risk Management Policy
Risk Appetite Framework, Risk Appetite Statement, Risk Tolerance etc.
Internal Liquidity Adequacy Assessment Process (ILAAP) – PRA (UK)
Adequacy of Internal Controls
Adherence to Regulatory Guidelines
Liquidity and Liquidity Risk
Identifying Types and Sources
Possible Triggers
What is risk
Examples of Risk Management
Principles of Risk Management
“What if "mindset
Implementation of risk management
Three lines of defense
Risk culture
Risk management committee and CROs
Risk governance
Strategic risk management
Risk Appetite
Enterprise Risk Management
Corporate Governance
Three Lines of Defense
Risk Appetite
Risk Culture
Astrology for prediction
Importance of measurement of risk
Mathematics and Statistics
Use of past experience
Two ways to estimate future
Variable dependent models
Statistical models
COSO
ISO 31000
Risk Appetite
Three lines of defense
Risk Management Policies
What are the components of strategy,
Why strategy is important
Strategic risk management
Environment
Economic
Demographic
Environmental
Political
Fiscal
Legal
Stakeholders
Shareholders
Customers
Employees
Regulators
Government
Rating Agencies
Agency Problem
Introduction to Risk Management
Examples of failures due to non-assessment of risk globally
Enterprise Risk Management
Principles of Risk Management
Why Risk Management is important from a Value addition point of view
Different Global Risk Management Standards
The presentation was given to Final Year students of Finance of Fortune Institute of Internal Business on 3rd September 2021
the spread of risk appetite across a 2x2 matrix and from there how risk appetite can be set.
There is a changing landscape of Indian customers where their jobs are no longer secured, the spending pattern of the younger generation have taken a turn towards more spending and fewer savings side, there is an emerging trend about change in lifestyle with more emergence of diabetes and hypertension at an early age; the retirement benefits are to be self-funded. Such changes over the last two decades require changes in the products to suit the emerging needs of the customers.
Also, need to be considering the change in the marketing and distribution from the more traditional approach to online and digital mode. The present-day customers require more ease of operation in their execution, so the providers need to be prepared for the present-day change and emerging future. Digitalization is the new mantra for success.
In this article, we shall look at a certain question related to risk appetite that is important from a business point of view, these are:
1. How to set a risk appetite?
2. What are the factors on which risk appetite depends?
3. What to do with risk appetite?
Before going into the details of the above questions, let’s look at the definition of risk and its convergence to risk appetite.
The book has eight sections and 21 chapters.
this chapter, different methods of risk mitigation are discussed in the life insurance industry. The chapter also discusses the utility of monitoring of risks and reporting.