Risk Management Insurance Industry in Queensland Australia

Introduction Risk management is a very crucial aspect in all fields of life. It is even more important when it comes to the business world that is faced by a variety of risks (both financial and non financial), which could lead to losses and to the extreme; it may lead to close down of business organizations.Advertising We will write a custom research paper sample on Risk Management: Insurance Industry in Queensland Australia specifically for you for only $16.05 $11/page Learn More Risk management entails the process of carefully identifying, assessing and prioritizing risk in a given setting, industry or business organization (Rowe, Mason, Dickel and Snyder 1989). It also involves the strategic application of the available resources in an effort to reduce, scrutinize, and manage the probability and effects of the risks while at the same time trying to maximize opportunities for better performance of a business (Chapman and Ward 1997). This piece of work will give an in depth discussion of the aspect of risk management in businesses. Much emphasis will be given to the issue of climate change and how it influences the flood risk in Queensland Australia and its effects to businesses affected. The insurance industry will be the main focus. Discussion There are various business risks with each being associated with different effects and hence necessitating different mitigation strategies. Climate change in any given part of the world could be linked to a variety of risk factors depending on the situation and the particular risk involved (NSW Department of Environment and Climate Change October 2007). Floods in Queensland, Australia are a major risk to not only personal lives but also to businesses and hence the need for effective risk management practices (Department of Finance1991). Transport is very much affected by the floods leading to delays, loss and damages of products in transits in a given business. Delays in delivery of the p roducts means delay in production processes and also delay in making deliveries to consumers (Grey 1995). Insurance industry is related to all forms of businesses where various activities and products are insured for instance against risks such as damages, floods, losses or fire.Advertising Looking for research paper on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More In regard to flood risk in Queensland Australia, the insurance industry has had a rough time in the process of managing the risk for instance in terms of compensations. This is because the risk is so prevalent. All in all, the insurance industry has taken responsibility of providing maps of areas that are at high risk of flood. It also cooperates with the government in mitigating and managing flood (Cooper, Grey, Raymond and Walker 2004). Although it is hard to ascertain the risk caused or associated with floods in Australia, there exist some ways through whi ch it could be estimated, for example through the impacts suffered (Tweeddale 2003). The major problem of the insurance industry however comes in the process of ascertaining the real floods threats for the purpose of compensation. This is because there may be chances of people claiming compensation from insurance companies even when the risk suffered is not associated with floods. According to Anonymous (2011), revenue for different crops such as fruits and vegetables declined following floods in Australia. The insurance industry has been experiencing difficulties in understanding and pricing floods and this has led to obstacle in achieving market available for insurance cover (BTE 2001). According to Australian Bureau of Agricultural and Resource Economics and Sciences (2011), it is evident that the risks linked to floods are very harmful to businesses. For this reason, there is dire need to come up with ways through which the risk can be managed. There are various strategies that could be applied in an effort to mitigate the risk including identification of threats and opportunities so as improve performance through maximizing opportunities and reducing threats (Vose 2000; The Royal Society of London 1992). It also requires rigorous thinking where the aspect of managing risk should be integrated with the overall decision making process in an organization (Coag 2004). An organization should also set up strategies that aim at being prepared for any form of risk so as to minimize the negative effects (The National Flood Risk Advisory Group 2008).Advertising We will write a custom research paper sample on Risk Management: Insurance Industry in Queensland Australia specifically for you for only $16.05 $11/page Learn More Effective communication is also a strategy that ought to contribute to better risk management. This is because risk management occurs in a social context and hence the need to involve all the stakeholders for effecti ve action to be taken (Sai Global 1999; Kaplan and Norton 2000). Cox, Gutteridge and Davey (2001) asserts that the task of managing flood risk is very much involving and for this reason, it ought not to be left for a single individual or party. Instead, various parties should join hands in making the situation better for the best of everyone involved. They include individuals, the government, non governmental organizations and other corporate bodies (International Standard ISO/FDIS 31000 2009). When all the above named parties are effectively involved in the process of risk management for instance the floods, there are usually fewer surprises due to preparedness and there is also exploitation of all the available opportunities due to proper understanding. The combined efforts also lead to improved planning, performance, and effectiveness. There is also the issue of enhanced accountability, governance and assurance due to transparency. Economy is also achieved in the course of risk m anagement (Arnold 2008; Insurance Council of Australia not dated). According to Department of Transport and Regional Services, Canberra EMA (1999), Climate change issue and its effect on floods risk in particular have played a great role in Tasmania. Tasmania is an Australian island that is very significant due to the wealth it holds in terms of natural resources, most of them being underexploited. The fact that this is an island makes the risk of flooding to be very involving mainly due to the aspect of mobility of people and goods from this place to the neighbouring areas as well as from the neighbouring areas to the island. In the recent past, Tasmania has been faced with a number of risks including the Tasmanian fires which claimed a significant number of lives and property. Floods are also a notable phenomenon in this island. The collapse of the main bridge, Tasman Bridge exacerbated this issue making crossing over to different directions difficult. This did not only affect the mobility of individuals but also of products and services thus affecting various businesses (Rawlings-Way, Worby and Mocatta 2008).Advertising Looking for research paper on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Conclusion From the above discussion, it is evident that the risk of flood is very influential. It is associated with a number of losses and damages particularly in the contemporary business world. The insurance industry in Australia is very touched by the issue of floods due to the fact the risk is very prevalent and affects various sectors of the economy for instance agriculture and tourism industries. Reference List Anonymous, 2011. Economic impact of Queensland’s natural disasters, PWC. Arnold, M., 2008. The Role of Risk Transfer and Insurance in Disaster Risk Reduction  and Climate Change Adoption Available [online] from Australian Bureau of Agricultural and Resource Economics and Sciences, 2011. The impact of recent flood events on commodities, ABARES Special Report BTE, 2001. Economic Cost of Natural Disasters in Australia. Report 103, Bureau of Transport Economics, Canberra. Chapman, C.B. and Ward, S.C., 1997. Project Risk Management: Processes, Techniques and Insig hts. Chichester, John Wiley Sons Coag, 2004. Natural Disasters in Australia. Reforming Mitigation, Relief and Recovery Arrangements. A report to the Council of Australian Governments by a high level officials’ group, August 2002 Cooper, D.F. Grey, S.J., Raymond G.A. and Walker P.R.,2004. Project Risk Management Guidelines: Managing Risk in Large Projects and Complex Procurements. Chichester, John Wiley Sons Cox, G, Gutteridge H and Davey, 2001. Analysis of Community Attitudes of Flood Related Risks Volumes 1 and 2, Hawkesbury Nepean Floodplain Management Strategy, Parramatta. Department of Finance, 1991. Handbook of Cost Benefit Analysis, Australia, Australian Government Publishing Service. Department of Transport and Regional Services, Canberra. EMA, 1999. Managing the Floodplain. Australian Emergency Management Series, Part 3, Volume 3, Guide 3, Emergency Management Australia, Canberra. Grey, S., 1995. Practical Risk Assessment for Project Management, Chichester, John Wil ey Sons Insurance Council of Australia, not dated. Flood Insurance in Australia – some useful Information, Current Issues Brief International Standard ISO/FDIS 31000, 2009. Risk management — Principles and guidelines, ISO/FDIS 31000 Kaplan and Norton, 2000. Having trouble with strategy? Then map it, Harvard Business Review, Vol. 78, No. 5, September-October 2000. NSW Department of Environment and Climate Change October, 2007, Floodplain Risk Management Guideline on Residential Flood Damages. Rawlings-Way, C., Worby, M. and Mocatta, G., 2008. Tasmania, New York, Lonely Planet Rowe, A.J., Mason, R.O., Dickel, K.E., and Snyder, N.H., 1989. Strategic Management: A Methodological Approach, Third Edition, Reading, MA Addison-Wesley Sai Global, 1999. Risk Management Guidelines Companion to AS/NZS 4360:2004. Standards Australia/Standards New Zealand The National Flood Risk Advisory Group, 2008. Flood risk management in Australia, The Australian Journal of Emergency Management , Vol. 23 No. 4, November 2008 The Royal Society of London, 1992. Risk: Analysis, perception and management. London, The Royal Society Tweeddale, H.M. 2003. Managing Risk and Reliability of Process Plants. Amsterdam, Gulf Professional Publishing Vose, D, 2000. Risk Analysis: A Quantitative Guide. 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