文献出处：Beasley M S, Clune R, Hermanson D R. Enterprise risk management in Insurance [J]. Journal of Accounting and Public Policy, 2014, 24(6): 521-531.（2014年最新翻译，英语专八，保证质量。

）作者：Beasley M S, Clune R, Hermanson D R文献名：Enterprise risk management in Insurance期刊名：Journal of Accounting and Public Policy年份：2014年，24卷，第6期，页码：521-531译文字数：5500字原文Enterprise Risk Management in InsuranceBeasley, Clune, HermansonTrust is a key determinants of any financial transaction. Exchanges in insurance markets are a particular type of financial transaction where a current payment – the premium –is exchanges for a promise of a future, contingent payment –the indemnity due when the casualty occurs. We argue that trust is key in fostering these type of exchanges. Trust enters two ways: because it affects the willingness of the company to supply insurance when the insured can cheat by claiming indemnities that are not due. Because it discourages people from purchasing insurance if they do not trust the company promise of readily paying the indemnity when due. We prove theoretically and empirically the relevance of trust in insurance exchanges and discuss policies to foster it.Enterprise Risk Management (hereinafter referred as “ERM”) interests a wide range of professions (e.g., actuaries, corporate financial managers, underwriters, accountants,and internal auditors), however, current ERM solutions often do not cover all risks because they are motivated by the core professional ethics and principles of these professions who design and administer them. In a typical insurance company all such professions work as a group to achieve the overriding corporate objectives.Risk can be defined as factors which prevent an organization in achieving its objectives and risks affect organizations holistically. The management of risk in isolation often misses its big picture. It is argued here that a holistic management of risk is logical and is the ultimate destination of all general management activities.Moreover, riskmanagement should not be a separate function of the business process;rather, managing downside risk and taking the opportunities from upside risk should be the key management goals. Consequently, ERM is believed as an approach to risk management, which provides a common understanding across the multidisciplinary groups of people of the organization. ERM should be proactive and its focus should be on the organizations future. Organizations often struggle to see and understand the full risk spectrum to which they are exposed and as a result they may fail to identify the most vulnerable areas of the business. The effective management of risk is truly an interdisciplinary exercise grounded on a holistic framework.Whatever name this new type of risk management is given (the literature refers to it by diverse names, such as Enterprise Risk Management, Strategic Risk Management, and Holistic Risk Management) the ultimate focus is management of all significant risks faced by the organization. Risk is an integral part of each and every action of the organization in the sense that an organization is a basket of contracts associated with risk (in terms of losses and opportunities). The idea of ERM is simple and logical, but implementation is difficult. This is because its involvement with a wide stakeholder community, which in turn involves groups from different disciplines with different beliefs and understandings. Indeed, ERM needs theories (which are the interest of academics) but a grand theory of ERM (which invariably involves an interdisciplinary concept) is far from having been achieved.Consequently, for practical proposes, what is needed is the development of a framework(a set of competent theories) and one of the key challenges of this thesis is to establish the key features of such a framework to promote the practice of ERM. Multidisciplinary Views of RiskThe objective of the research is to study the ERM of insurance companies. In line with this it is designed to investigate what is happening practically in the insurance industry at the current time in the name of ERM. The intention is to minimize the gap between the two communities (i.e., academics and practitioners) in order to contribute to the literature of risk management.In recent years ERM has emerged as a topic for discussion in the financial community,in particular, the banks and insurance sectors. Professional organizationshave published research reports on ERM. Consulting firms conducted extensive studies and surveys on the topic to support their clients. Rating agencies included the ERM concept in their rating criteria. Regulators focused more on the risk management capability of the financial organizations. Academics are slowly responding on the management of risk in a holistic framework following the initiatives of practitioners.The central idea is to bring the organization close to the market economy. Nevertheless,everybody is pushing ERM within the scope of their core professional understanding.The focus of ERM is to manage all risks in a holistic framework whatever the source and nature. There remains a strong ground of knowledge in managing risk on an isolated basis in several academic disciplines (e.g., economics, finance, psychology,sociology, etc.). But little has been done to take a holistic approach of risk beyond disciplinary silos. Moreover, the theoretical understanding of the holistic (i.e., multidisciplinary)properties of risk is still unknown. Consequently, there remains a lack of understanding in terms of a common and interdisciplinary language for ERM.Risk in FinanceIn finance, risky options involve monetary outcomes with explicit probabilities and they are evaluated in terms of their expected value and their riskiness. The traditional approach to risk in finance literature is based on a mean-variance framework of portfolio theory, i.e., selection and diversification. The idea of risk in finance is understood within the scope of systematic (non-diversifiable) risk and unsystematic (diversifiable)risk. It is recognized in finance that systematic risk is positively correlated with the rate of return. In addition, systematic risk is a non-increasing function of a firm’s growth in terms of earnings. Another established concern in finance is default risk and it is argued that the performance of the firm is linked to the firm’s default risk. A large part of finance literature deals with several techniques of measuring risks of firms’ investment portfolios (e.g., standard deviation, beta, VaR, etc.). In addition to the portfolio theory, Capital Asset Pricing Model (CAPM) was discovered in finance to price risky assets on the perfect capital markets. Finally, derivative markets grew tremendously with the recognition of option pricing theory.Risk in EconomicsRisk in economics is understood within two separate (independent) categories, i.e.,endogenous (controllable) risk and background (uncontrollable) risk. It is recognized that economic decisions are made under uncertainty in the presence of multiple risks.Expected Utility Theory argues that peoples’ risk attitude on the size of risk (small,medium, large) is derived from the utility-of-wealth function, where the utilities of outcomes are weighted by their probabilities. Economists argue that people are risk averse (neutral) when the size of the risks is large (small).Prospect theory provides a descriptive analysis of choice under risk. In economics, the concept of risk-bearing preferences of agents for independent risks was described under the notion of “ standard risk aversion.” Most of the economic research on risk is originated on the study of decision making behavior on lotteries and other gambles. Risk in PsychologyWhile economics assumes an individual’s risk preference is a function of probabilistic beliefs, psychology explores how human judgment and behavior systematically forms such beliefs. Psychology talks about the risk taking behavior (risk preferences).It looks for the patterns of human reactions to the context, reference point,mental categories and associations that influence how people make decisions.The psychological approach to risk draws upon the notion of loss aversion that manifests itself in the related notion of “regret.” According to Willett; “risk affects economic activity through the psychological influence of uncertainty.” Managers’ attitude of risk taking is often described from the psychological point of view in terms of feelings.Psychologists argue that risk, as a multidisciplinary concept, can not be reduced meaningfully by a single quantitative treatment. Consequently, managers tend to utilize an array of risk measurers to assist them in the decision making process under uncertainty. Risk perception plays a central role in the psychological research on risk, where the key concern is how people perceive risk and how it differs to the actual outcome. Nevertheless, the psychological research on risk provides fundamental knowledge of how emotions are linked to decision making.Risk in SociologyIn sociology risk is a socially constructed phenomenon (i.e., a social problem) and defined as a strategy referring to instrumental rationality. The sociological literature on risk was originated from anthropology and psychology is dominated by two central concepts. First, risk and culture and second, risk society. The negative consequences of unwanted events (i.e., natural/chemical disasters, food safety) are the key focus of sociological researches on risk. From a sociological perspective entrepreneurs remain liable for the risk of the society and responsible to share it in proportion to their respective contributions. Practically, the responsibilities are imposed and actions are monitored by state regulators and supervisors.Nevertheless, identification of a socially acceptable threshold of risk is a key challenge of many sociological researches on risk.Convergence of Multidisciplinary Views of RiskDifferent disciplinary views of risk are obvious. Whereas, economics and finance study risk by examining the distribution of corporate returns, psychology and sociology interpret risk in terms of its behavioral components. Moreover, economists focus on the economic (i.e., commercial) value of investments in a risky situation.In contrast, sociologists argue on the moral value (i.e., sacrifice) on the risk related activities of the firm. In addition, sociologists’ criticism of economists’concern of risk is that although they rely on risk, time, and preferences while describing the issues related to risk taking, they often miss out their interrelationships(i.e., narrow perspective). Interestingly, there appears some convergence of economics and psychology in the literature of economic psychology. The intention is to include the traditional economic model of individuals’ formal rational action in the understanding of the way they actually think and behave (i.e., irrationality).In addition, behavioral finance is seen as a growing discipline with the origin of economics and psychology. In contrast to efficient market hypothesis behaviour finance provides descriptive models in making judgment under uncertainty.The origin of this convergence was due to the discovery of the prospect theory in the fulfillment of the shortcomings of von Neumann-Morgenstern’s utility theory for providing reasons of human (irrational) behavior under uncertainty (e.g., arbitrage).Although, the overriding enquiry of disciplines is the estimation of risk, theycomparing and reducing into a common metric of many types of risks are there ultimate difficulty. The key conclusion of the above analysis suggests that there exist overlaps on the disciplinary views of risk and their interrelations are emerging with the progress of risk research. In particular, the central idea of ERM is to obscure the hidden dependencies of risk beyond disciplinary silos.Insurance Industry PracticeThe practice of ERM in the ins urance industry has been drawn from the author’s PhD research completed in 2006. The initiatives of four major global European insurers(hereinafter referred as “CASES”) were studied for this purpose. Out of these four insurers one is a reinsurer and the remaining three are primary insurers. They were at various stages of designing and implementing ERM. A total of fifty-one face-to-face and telephone interviews were conducted with key personnel of the CASES in between the end of 2004 and the beginning of 2006. The comparative analysis (compare-and-contrast) technique was used to analyze the data and they were discussed with several industry and academic experts for the purpose of validation. Thereafter,a conceptual model of ERM was developed from the findings of the data.Findings based on the data are arranged under five dimensions. They are understanding;evaluation; structure; challenges, and performance of ERM. Understanding of ERMIt was found that the key distinction in various perceptions of ERM remains between risk measurement and risk management. Interestingly, tools and processes are found complimentary. In essence, meaning that a tool can not run without a process and vice versa. It is found that the people who work with numbers (e.g.,actuaries, finance people, etc.) are involved in the risk modeling and management(mostly concerned with the financial and core insurance risks) and tend to believe ERM is a tool. On the other hand internal auditors, company secretaries, and operational managers; whose job is related to the human, system and compliance related issues of risk are more likely to see ERM as a process.ERM: A ProcessWithin the understanding of ERM as a process, four key concepts were found. They are harmonization, standardization, integration and centralization. In fact, theyare linked to the concept of top-down and bottom-up approaches of ERM.The analysis found four key concepts of ERM. They are harmonization, standardization,integration and centralization (in decreasing order of importance). It was also found that a unique understanding of ERM does not exist within the CASES, rather ERM is seen as a combination of the four concepts and they often overlap. It is revealed that an understanding of these four concepts including their linkages is essential for designing an optimal ERM system.Linkages Amongst the Four ConceptsAlthough harmonization and standardization are seen apparently similar respondents view them differently. Whereas, harmonization allows choices between alternatives,standardization provides no flexibility. Effectively, harmonization offers a range of identical alternatives, out of which one or more can be adopted depending on the given circumstances. Although standardization does not offer such flexibility,it was found as an essential technique of ERM. Whilst harmonization accepts existing divergence to bring a state of comparability, standardization does not necessarily consider existing conventions and definitions. It focuses on a common standard, (a “top-down” approach). Inde ed, integration of competent policies and processes,models, and data (either for management use, compliance and reporting) are not possible for global insurers without harmonizing and standardizing them. Hence, the research establishes that a sequence (i.e., harmonization, standardization, integration,and then centralization) is to be maintained when ERM is being developed in practice (from an operational perspective). Above all, the process is found important to achieve a diversified risk culture across the organization to allocate risk management responsibilities to risk owners and risk takers.It has long been recognized that trust is a key ingredient in fostering economic and financial transaction and achieving business success. Years ago, Nobel prize Kenneth Arrow (1972), after recognizing the pervasiveness of mutual trust in commercial and non-commercial transactions, went so far as to state that “it can be plausibly argued that much of the economic backwardness in the world can be explained by the lack of mutual confidence”. Since then plenty of evidence has shown that aggregate trust and aggregate economic performance are linked by a strongpositive relationship. In addition, in high trust countries corporations can grow larger (La Porta et. al. (1997)) and stock markets and financial markets can prosper (Guiso et. al., 2009). As Arrow noticed, trust, while being an ingredient in most exchanges, it is likely to be particularly important in those transactions that involve an element of time. Financial transaction, being all exchanges of money over time, should be particularly dependent on trust. In fact any financial transaction, being it a loan, a purchase of a stock of a listed company, the investment in the bond of a corporation or a government or the purchase of an insurance policy, has a fundamental characteristic: its is an exchange of money today against a promise of (more) money in the future. But what leads one to believe that promise and make the exchange actually possible? This is trust.Since insurance exchanges are financial exchanges, also these exchanges are trust dependent. In insurance contracts trust is entailed in two ways. First, the insurer when entering the contract and paying the insurance premium upfront has to trust that the insurance company will pay the indemnity promptly in the case the casualty actually occurs at some time in the future. Second, the insurance company has to trust that the insurer, once the premium is paid, does not act so as to raise the risk of the casualty by adopting a more risk-taking behavior. This type of risk falls under the name of moral hazard and may be cautioned against by pricing it into the premium. Trust is entailed also because the insurer can cheat the company by pretending that a casualty actually has occurred when it did not, or by shamming a casualty or by aggravating its consequences. The possibility of frauds together with limited legal enforcement imply that the willingness of an insurance company to offer insurance to a certain pool of customers depends also on its beliefs about these pool average trustworthiness.In sum, insurance exchanges require trust on two sides. Most importantly, as will argue the two types of trust may interact in important ways; in particular limited trust on the side of the insurance company vis its customers can result in limited trust in the latter towards the company. I will discuss this issue latter.For now on I will be mostly focusing on the trust that insurers have towards thecompany and how this affects their willingness to by insurance.The entrepreneurs interviewed in the ANIA sample were asked to report their level of trust towards various entities, including: towards other people in general, other entrepreneurs, insurance companies, banks, and the stock exchange. Answers were given from a scale of zero to 10 where zero means no trust and 10 implies complete trust. There is great dispersion in the answers regarding the measurement of trust. On average, the entrepreneurs have a high level of trust towards other people in general than towards either banks or insurance companies. Average trust towards people in general is equal to 5.6 (median 6), slightly less than 13% of those interviewed had a very low trust level (not more than 2), and 15.5% had a high level of trust (equal to or more than 8)- see Figure 1, A. Trust towards other entrepreneurs has a similar average (5.7) but a lower frequency in the low levels of trust as well as the high levels; it is less probable that an entrepreneur completely distrusts or trusts another entrepreneur rather than a regular individual.These results indicate that once the degree of trust towards insurance companies is accounted for, trust towards others and towards people does not have an additional direct effect on the choice of being insured or not. But, what determines trust towards insurance companies? If this also reflects the trust that a person has in others, then this effect is not direct but indirect because it influences the trust in insurance companies. Similar reasoning can be applied also to trust towards banks and towards financial institutions in general. It is plausible that trust in insurance companies reflects the perception people have in the trustworthiness of banks and that a low level of trust in banks can translate into a low level of trust in insurance companies.We have argued that an insurance contract, being just a particular financial contract, are as such exposed to the possibility of abuse and are thus trust sensitive. In the literature, the importance of trust has been overlooked, partly because of an implicit assumption that mis-behavior in insurance markets receives full legal protection. We have argued that legal protection is never likely to be perfect even in setting with particularly efficient legal institutions. When this is the case, exchanges in insurance markets are affected by trust. Trust is required on the side on thecompany that has to trust the insurer not to commit insurance frauds by manipulating ex-post the amount of damage (or lying about its very existence), or behaving in such a way as to alter the risk faced by the company.However, trust is required on the side of the insured who has to believe that is that the insurance company complies with its contractual obligations in case of damages. We have argued and documented that the trust people on the player in insurance markets has relevant effects on peoples decisions to insure and how much to insurance to buy. Hence, in high trust communities insurance markets are more likely to prosper.This leads us naturally to asking what sort of policies can help sustain a high level of level in insurance markets. We distinguish two types of trust-enhancing policies. The first type refers to company-level policies and is meant to raise the trust people have in that company, being them existing customers or perspective customers. The second type of policies pertains to the industry and are meant, among other, to avoid the negative spillovers that misbehavior by one component of the industry has on the perceived trustworthiness of the pother members.Improve the quality of the match between the insured and the policy distributor An interesting result emerging past research and a from the ANIA survey is that trust tends to increase with the degree of affinity between who expresses and to whom the trust is directed. Peo ple tend to trust others that are more similar to them, that is have a high degree of affinity with (Bu tler and Guiso, 2010). Improving the matching between who sells and who buys insurance, choosi ng people to whom one feels akin and building stable relationships is a way of increasing the level of trust of the insured..Support the enforcement of punishment of single companies misbehaviorMisbehavior by one industry member destroys the trust that people have in the other member s of the industry. These spillovers imply that there is a role for industry level policies meant to set high standards of behavior and punish deviants, well and above any punishment that may follow fr om existing legal norms. Codes of conduct and strict rules of behavior that are shared by the indus try members and hared procedures to punish deviation would greatly contribute to keeping high le vels of trust towards each single insurance company.译文保险公司的风险管理作者：比斯利；科隆；霍曼逊信任是任何金融交易的一个关键决定因素。