Underwriting factors wholly out of the underwriter’s control. As

UnderwritingRisk: Underwriting is the fundamental first skillthat is needed for an insurer to succeed in the market. This risk mayeither arise from an inaccurate assessment of the risks entailed in writing aninsurance policy, or from those very factors wholly out of the underwriter’scontrol.

As a result, the policy may cost the insurer much more than it hasearned in premiums.The main focus in LifeInsurance is proper skillful underwriting and any inappropriate action can  LiquidityRisk: Liquidity is concerned withthe current and future maintenance of adequate levels of cash and liquidassets. There is always a time Lag between receipt of premium and payment ofclaims and hence there should be no liquidity problem. But there can always beunanticipated claims or surrender of policies or claims on account of catastrophes. ActuarialRisk: Actuarial risk arises inpricing (premium rate) due to variance in mortality rate, perils, hazards etc.projected with actual position, (say early termination of the policies,catastrophe etc.

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). AssetLiability Management Risk (ALM): ALM does not imply that assetsshould be matched as closely as possible to liabilities but the mismatch shallbe effectively managed to contain the damages if any arising there from. Riskand Capital: Insurer need to regularlyperform its own risk and solvency assess­ment (ORSA). In the process of riskassessment and management of solvency position, underwriting process, creditrisk, market risk, operational and liquid­ity risks should be reassessed.  Catastrophe Risk.

In Insurance Industry the other area of riskis catastrophe risk which relate to insurance claims arising out loss sufferedby the policy holders on account of natural calamities like, flood, cyclone,earthquake, tsunami etc. In such cases the claim will be very large causingstress on insurance companies.    Reputational Risk:  In Pakistan Life Insurancebusiness also faces a threat If there’s an improper management in the insuranceindustry; it will directly affect the reputation of the company. Here theimportant aspect is customer satisfaction, so if there’s any delay in theclaims or late payments it is risky for that insurance company to survive inthe market. Cyber Risk: The Digitalization /Cyber Era ofthe globe increases in all Sectors including Insurance business .Thisinnovation is very useful  to providebetter services to the customers. This innovative growth in I.

T sector alsoleads to increased operational risk, i.e. Cyber Risk .The same is a matter ofgreat concern as it may imply increasing Insurance Risk as a Cyber attack maylead to lost customer data, damage to reputation, business interruption, etc.This situation may also increase Insurers’ operational costs as they need toincrease their cyber security capabilities. ComplianceRisk: Bancassurance , rather a new opening , alsocreate another risk ,i.e Compliance Risk .In this system Insurer reach banks’customers through their Nation-wide large branch system and their arose apotential risk for mis-selling ,which may lead to Compliance risks.

But SECP& SBP have taken steps as SECP issues Bancassurance Regulations -2015,whereas SBP issued a Circular on Sale of Third party products by Banks in 2012.  Other Risks: The operational risks ininsurance include human failure, fraud, technology failure, failed system andprocedure. Violation of environmental laws and regulations. The risks may besystemic risk or un-systemic risk.