Risk Management: Fundamentals, Theory, and Practice in Asia

Foreword
Acknowledgements
Contents
Abbreviations
List of Figures
List of Tables
Part I: The General Theory of Risk Management
	1: The Concept of Risk and Corporate Risk
		1.1 The Concept of Risk
			1.1.1 Risk in Insurance
			1.1.2 Deviation from Expected Value
			1.1.3 Black Swan
		1.2 Classification by Possibilty of Insurance Coverage
			1.2.1 Pure Risk and Speculative Risk
			1.2.2 Static Risk and Dynamic Risk
		1.3 Corporate Risk Types
			1.3.1 Market Risk
			1.3.2 Credit Risk
			1.3.3 Operational Risk
	2: Enterprise Risk Management and Related Fields
		2.1 RM
		2.2 Enterprise Risk Management
		2.3 Crisis Management
		2.4 Business Continuity Plan
			2.4.1 Major Earthquakes
			2.4.2 Floods (Floods, Storms, Tsunamis)
			2.4.3 Infectious Diseases (New Influenza Strain Pandemic)
			2.4.4 Ash Fall Due to Eruption of Volcano and Snow Fall Following Cold Wave
			2.4.5 Indiscriminate Human-Made Disaster
			2.4.6 Disasters, Bankruptcy, and Scandals of Affiliated Suppliers
			2.4.7 Intimidation/Theft/Cyber Attacks
			2.4.8 Information Leakage, Food Poisoning, Window Dressing
			2.4.9 Death, Hospitalization, Retirement, or Job Change of Important Person
		2.5 Business Continuity Management
	3: Accounting Fraud and Internal Control
		3.1 Frequent Accounting Fraud
			3.1.1 Enron
			3.1.2 WorldCom
			3.1.3 Cockroach Theory
		3.2 SOX Act
		3.3 Companies Act
		3.4 Financial Instruments and Exchange Act
		3.5 Companies Act and the Financial Instruments and Exchange Act
	4: COSO ERM Framework
		4.1 COSO Organization
		4.2 Internal Control Framework
		4.3 The COSO ERM (2004) Framework
			4.3.1 ERM Framework Establishment
			4.3.2 Definition of ERM
			4.3.3 Features of COSO ERM (2004)
			4.3.4 COSO ERM (2004) Objective Categories
			4.3.5 The COSO ERM (2004) Basic Components
			4.3.6 Effectiveness and Limitations of COSO ERM (2004)
		4.4 COSO ERM (2017)
			4.4.1 Outline of COSO ERM (2017)
			4.4.2 Main COSO ERM (2017) Revisions
				4.4.2.1 Definition of Risk
				4.4.2.2 Integrate Risk with Strategy and Performance
				4.4.2.3 Five Components and 20 Principles
				4.4.2.4 Risk Capacity
			4.4.3 Relationship Between COSO Internal Control and COSO ERM (2017)
	5: ISO RM Framework
		5.1 ISO Organizations and RM Standards
		5.2 Risk and RM Definitions
		5.3 ISO 31000 System
		5.4 Principles (ISO 31000:2018)
		5.5 Framework (ISO 31000:2018)
		5.6 Process (ISO 31000:2018)
		5.7 Features of ISO 31000
	6: Risk Assessment
		6.1 Risk Assessment: An Overview
		6.2 Risk Assessment Technique
		6.3 Risk Identification
		6.4 Risk Analysis
			6.4.1 An Overview
			6.4.2 Consequence Analysis
			6.4.3 Scenario Analysis
				6.4.3.1 Event Tree Analysis
				6.4.3.2 Fault Tree Analysis
				6.4.3.3 Weakness Analysis
			6.4.4 Quantitative Risk Analysis Indicators
				6.4.4.1 Value at Risk
				6.4.4.2 Probable Maximum Loss
				6.4.4.3 Expected Loss
			6.4.5 Risk Curve
			6.4.6 Risk Matrix
		6.5 Risk Evaluation
		6.6 Risk Communication
	7: Value at Risk
		7.1 Probability
			7.1.1 Concept of Probability
			7.1.2 Variance and Standard Deviation
				7.1.2.1 Variance
				7.1.2.2 Standard Deviation
				7.1.2.3 Volatility
		7.2 Value at Risk
			7.2.1 Overview
			7.2.2 Origin and Development
			7.2.3 Measurement Method
				7.2.3.1 Variance-Covariance Method
				7.2.3.2 Historical Simulation Method
				7.2.3.3 Monte Carlo Simulation Method
			7.2.4 Limitations
		7.3 Expected and Unexpected Loss
		7.4 VaR by Risk Type
		7.5 Stress Test
Part II: Risk Financing
	8: Risk Treatment and ART
		8.1 Risk Treatment: An Overview
		8.2 Risk Treatment Measures
			8.2.1 An Overview
			8.2.2 Risk Control
				8.2.2.1 Risk Avoidance
				8.2.2.2 Loss Control
				8.2.2.3 Separation and Combination of Risk
				8.2.2.4 Risk Transfer
			8.2.3 Risk Financing
				8.2.3.1 Retention
				8.2.3.2 Loss (Risk) Transfer
		8.3 Risk Financing and Corporate Finance
			8.3.1 Relationship Between Risk Financing and Corporate Finance
			8.3.2 Insurance and ART
		8.4 Financial Market
		8.5 Impact of ARTs on Finances
	9: Limitations of Insurance as a Risk Financing Tool
		9.1 Insurance and Risk Financing
		9.2 Insurable Interest and Insurance
			9.2.1 Insurable Interest and Prohibition of Gain
			9.2.2 Relationship Between Insurable Value and Insurance Amount
			9.2.3 Subrogation
		9.3 Insurance Crisis in the United States
			9.3.1 The Start of the Insurance Crisis in the United States
				9.3.1.1 The First Insurance Crisis
				9.3.1.2 The Second Insurance Crisis
			9.3.2 Underwriting Cycle
			9.3.3 Cash Flow Underwriting
			9.3.4 Punitive Damages
			9.3.5 Products Liability Lawsuit
			9.3.6 Court System
	10: Captive Insurers and Finite Insurance
		10.1 Captive Insurance Companies
			10.1.1 Definition of a Captive Insurance Company
			10.1.2 Captive Insurance Companies Types
				10.1.2.1 The Essence of a Captive Insurance Company
				10.1.2.2 Classification by Insurance Underwriting Form
				10.1.2.3 Classification by Ownership
			10.1.3 Japanese Business Companies and Captive Insurance Companies
			10.1.4 Benefits of Captive Insurance Companies
				10.1.4.1 Risk Management
				10.1.4.2 Cost Optimization
				10.1.4.3 Risk Financing Means for Risks that Are Difficult to Insure
				10.1.4.4 Leveling Fluctuations in Insurance Premium Rates
				10.1.4.5 Profit-Center
		10.2 Finite Insurance
			10.2.1 Loss Portfolio Transfer
			10.2.2 Spread Loss
			10.2.3 Post-loss Funding Program
	11: Contingent Capital
		11.1 Overview
		11.2 Contingent Debt
			11.2.1 Commitment Line
			11.2.2 Contingent Loan
		11.3 Contingent Equity
			11.3.1 Contingent Equity (CoCo Bond)
			11.3.2 Contingent Surplus Notes and Contingent Equity Puts
	12: Securitization and Insurance-Linked Securities
		12.1 Asset-Backed Securities
		12.2 Real Estate Securitization
		12.3 Securitization of Receivables
			12.3.1 Commercial Mortgage-Backed Securities
			12.3.2 Residential Mortgage-Backed Security
			12.3.3 Collateralized Debt Obligation
		12.4 Securitization and the Financial Crisis
			12.4.1 Subprime Loans
			12.4.2 Credit Default Swap
			12.4.3 CDS and Subprimes
		12.5 Insurance-Linked Securities
			12.5.1 The Emergence of Insurance-Linked Securities
			12.5.2 The Mechanism of Insurance-Linked Securities
			12.5.3 Trigger
		12.6 Japan´s Earthquake Insurance and ILS
	13: Insurance-Linked Security Types
		13.1 CAT Bonds
			13.1.1 CAT Bond Mechanism
			13.1.2 CAT Bond Effects
				13.1.2.1 Long-Term Cover
				13.1.2.2 Fixed Cost
				13.1.2.3 Reinforcement of Underwriting Capacity of Insurance Companies
				13.1.2.4 Immediateness of Funds
				13.1.2.5 Neutrality from Credit Risk
				13.1.2.6 Flexible Response to Issuance Conditions
				13.1.2.7 Rating
				13.1.2.8 Risk Independence
			13.1.3 CAT Bond Issuance Example
				13.1.3.1 Case of Oriental Land (Issued by the Company)
				13.1.3.2 JA Mutual Aid CAT Bond ``Muteki´´ (Reinsurance Company Intervention)
				13.1.3.3 Typhoon Risk Securitization (Reinsurance Company Intervention)
				13.1.3.4 World Bank CAT Bond
		13.2 Sidecar
		13.3 Industry Loss Warranties
		13.4 Collateralized Reinsurance
	14: Derivatives and Insurance Derivatives
		14.1 Derivatives
			14.1.1 Overview
			14.1.2 Futures
				14.1.2.1 Exchange Transactions
				14.1.2.2 Standardization
				14.1.2.3 Margin System
				14.1.2.4 Difference Settlement
			14.1.3 Options
				14.1.3.1 Outline
				14.1.3.2 Profit and Loss of Call Options
				14.1.3.3 Profit and Loss of Put Options
				14.1.3.4 Offsetting Transaction
				14.1.3.5 Loan with Cap
			14.1.4 Swap
				14.1.4.1 Interest Rate Swap
				14.1.4.2 Currency Swap
		14.2 Insurance Derivatives
	15: Weather Derivatives Trading
		15.1 Weather Risk and Companies
		15.2 Weather Derivatives
			15.2.1 Features of Weather Derivatives
			15.2.2 Types of Weather Derivatives
			15.2.3 Effects of Weather Derivatives
		15.3 Weather Derivatives Trading
			15.3.1 CDD and HDD
			15.3.2 Listing of Weather Derivatives
		15.4 Weather Derivatives in Japan
		15.5 Examples of Weather Derivative Products
			15.5.1 Risk Exchange Transactions
			15.5.2 Non-life Insurance Company Products
	16: Risk Management in China
		16.1 Earthquake Risk
			16.1.1 Characteristics of Earthquakes in China
			16.1.2 Large-Scale Earthquakes
				16.1.2.1 Tangshan Earthquake
				16.1.2.2 Sichuan Earthquake
				16.1.2.3 Yunnan Earthquake
			16.1.3 Earthquake Insurance
		16.2 Typhoon/Flood
			16.2.1 Occurrence of Disaster
			16.2.2 Agricultural Disaster Insurance
		16.3 Cyber Risk
			16.3.1 Overview
				16.3.1.1 Malware Infection
				16.3.1.2 Targeted Attack E-mail
				16.3.1.3 DoS/DDoS Attacks
				16.3.1.4 Website Tampering
				16.3.1.5 List-Type Account Hacking
				16.3.1.6 Watering Hole Attack
			16.3.2 Cybersecurity Law
			16.3.3 Cyber Risk and Insurance
		16.4 Pandemic
			16.4.1 Pandemic History
			16.4.2 Infectious Diseases and Insurance
	17: Risk Management in South Korea
		17.1 National Disaster Treatment
		17.2 Natural Disasters
			17.2.1 Wind and Flood Damage
			17.2.2 Earthquakes
		17.3 Wind and Flood Insurance
			17.3.1 Disaster Support Money and Storm and Flood Damage Insurance
			17.3.2 Risk Diversification of Insurance System
		17.4 Cyber Risks
			17.4.1 Cyber Risks Trends
			17.4.2 Cyber Risks and Insurance
		17.5 Pandemic
References
	Japanese Literature, etc.
	English Literature
Index