Evaluating the Impact of Accounting Policies on Risk Management Practices in Insurance Companies: A Comprehensive Analysis of Financial Stability and Performance Metrics
DOI:
https://doi.org/10.62951/ijecm.v1i4.246Keywords:
Accounting Policies, Risk Management, Insurance Companies, Financial Stability, Financial ReportingAbstract
This study aims to critically analyze how accounting policies implemented in insurance companies contribute to effective risk management and overall financial stability. As the business environment becomes increasingly complex and competitive, insurance firms must adopt robust accounting policies that not only facilitate accurate financial reporting but also enhance their ability to identify, assess, and manage various risks. By employing a mixed-methods approach that integrates both qualitative and quantitative data, this research will explore the intricate relationships between accounting policies, risk management strategies, and their subsequent impact on the financial performance of insurance companies. The study will first provide a theoretical framework that outlines the significance of sound accounting practices in the context of risk management. It will then delve into empirical analysis through case studies of selected insurance companies, assessing how their accounting policies influence risk assessment and mitigation processes. Data will be collected via surveys and interviews with key stakeholders, including financial managers, risk officers, and auditors, to gather insights on the effectiveness of these policies in practice. Furthermore, this research will evaluate the correlation between specific accounting practices and key performance indicators, such as profitability, solvency, and liquidity ratios. By identifying best practices and potential areas for improvement, the study aims to offer practical recommendations that can enhance the alignment between accounting policies and risk management efforts. Ultimately, this research seeks to contribute to the existing literature on accounting and risk management in the insurance sector, providing valuable insights that can inform policy formulation and strategic decision-making within the industry. Through this comprehensive evaluation, the study aspires to foster a deeper understanding of how effective accounting policies can serve as a foundation for robust risk management frameworks, thereby promoting long-term financial stability in insurance companies.
Downloads
References
Adams, R. B., & Ferreira, D. (2009). Women in the boardroom and their impact on governance and performance. Journal of Financial Economics, 94(2), 291-309.
Akerlof, G. A. (1970). The market for "lemons": Quality uncertainty and the market mechanism. Quarterly Journal of Economics, 84(3), 488-500.
Basel Committee on Banking Supervision. (2011). Basel III: A global regulatory framework for more resilient banks and banking systems. Bank for International Settlements.
Beasley, M. S., Clune, R., & Hermanson, D. R. (2005). Enterprise risk management: An empirical analysis of the factors associated with the extent of implementation. Journal of Accounting and Public Policy, 24(6), 521-531.
Brown, G., & Tarazona, A. (2010). The role of transparency in risk management: A case study in the insurance sector. Risk Management, 12(2), 123-145.
Crouhy, M., Galai, D., & Mark, R. (2001). Risk management. McGraw-Hill Education.
Deloitte. (2019). The evolution of risk management in insurance. Deloitte Insights.
Diamond, D. W., & Rajan, R. G. (2001). Liquidity risk, liquidity creation, and financial fragility: A theory of banking. Journal of Political Economy, 109(2), 287-327.
Ernst & Young. (2020). Global insurance outlook. E&Y.
Froot, K. A., & Stein, J. C. (1998). Risk management, capital budgeting, and capital structure policy for financial institutions: An integrated approach. Journal of Financial Economics, 47(1), 55-82.
Ghosh, S. (2013). Role of accounting in risk management. International Journal of Business and Management, 8(22), 53-62.
Gibbons, R. (2005). Four formal(izable) theories of the firm. Journal of Economic Behavior & Organization, 58(2), 193-210.
International Accounting Standards Board. (2018). IFRS 9 Financial Instruments. IASB.
Jorion, P. (2007). Financial risk manager handbook. Wiley Finance.
KPMG. (2021). Insurance risk management: Trends and challenges. KPMG International.
Lam, J. (2017). Enterprise risk management: From incentives to controls. Wiley.
Mikes, A. (2009). Risk management and the role of accounting. Accounting, Organizations and Society, 34(4), 211-235.
Modigliani, F., & Miller, M. H. (1958). The cost of capital, corporation finance and the theory of investment. American Economic Review, 48(3), 261-297.
Power, M. (2007). Organized uncertainty: Designing a world of risk management. Oxford University Press.
PricewaterhouseCoopers. (2020). Insurance 2020: The digital prize. PwC.
Raghavan, S. (2012). The role of risk management in the insurance industry. Risk Management and Insurance Review, 15(2), 219-230.
Rejda, G. E., & Miller, M. (2017). Principles of risk management and insurance. Pearson.
Schiller, R. J. (2015). Finance and the good society. Princeton University Press.
Stulz, R. M. (1996). Rethinking risk management. Journal of Applied Corporate Finance, 9(3), 8-25.
Tufano, P. (2003). Financial literacy and financial education: The role of the financial services industry. The Journal of Financial Education, 29(1), 1-10.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2024 International Journal of Economics, Commerce, and Management
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.