The Role of Risk Management and its Related Issues for Companies Economic Growth and Development of Insurance Sector: The Evidence of Georgia

Abstract

This study provides information on the role of risk management in the insurance business. It presents different types of impacts that show us that every insurance company has to provide effective risk management process. Moreover, some major loss events in the history will be examined showing the possible outcomes. Research question of this paper is: “What is the role of risk management for companies economic growth and development for insurance sector?” H0- RM has an impact on economic growth and development of insurance sector To find the answer to research question we analyze all aspects of risk management. We provide information about Georgian insurance market and overview of companies. Also we analyze impact on fund capitalization and economic growth. International standards and requirement for risk management are analyzed. In particular, the paper encompasses The Solvency Directive: European regulations for insurance companies by three pillar approach. And also to answer the research question we did comparison between Azerbaijani, Armenian and Georgian insurance markets. Survey results show that, risk management, assessment and control is critical for organizations operations. It is important to define proper strategy and follow it in order to manage potential risks. Georgian market is developing and companies start to implement risk management function, however current level of managing risks is low.