1

Preface:

This report is produced with the objective, to learn about the risk management department oI the
EFU insurance as a whole. The operations that take place at the EFU insurance Risk
management department could be understood. The purpose also included that how do
management team manage the exposure oI the oI the organization to the risk, how to make
policies that could prevent the organization Irom being involved into any sort oI a risky situation
and above them how do the management team make sure that those policies are being
implemented and observed throughout the organization.
In understanding all these Ieatures oI the Risk Management at EFU insurance MR. Usman
Rashid Unit manager, Multan cantt branch ) and MR. Adil khursheed (Sales consultant, Multan
cantt branch) helped us. With this opportunity our group would like to thank him Ior providing
us the all valuable inIormation, and Ior providing us his precious time.
Our group members would also like to thank Mr. Saleem Baloach our Principles oI
Management ProIessor Ior giving us a task, which we all loved to complete and which in the end
proved to be very useIul in improving our knowledge over diIIerent issues regarding the Risk
Management at Allied Bank.
1hanks to all of them!







Acknowledgements:

This report was only possible with the eIIorts oI our entire group. Thanks a lot to the entire team
Ior their all-embracing contributions. We would also like to thank the people who showed
genuine interest in making this all important report possible, by providing their opinions
regarding the report and suggestions which help us in improving and making oI this segment oI
the management report.
And in the end, we would also like to thank our course instructor Mr. Saleem Baloach Ior
assigning us an interesting project and guiding us at every step oI this report.




ontents
PreIace: ....................................................................................................................................... 1
Acknowledgements: ....................................................................................................................
Industry ...................................................................................................................................... 7
Organization ............................................................................................................................... 7
Main risk oI the organization ...................................................................................................... 7
Risk ............................................................................................................................................ 8
Risk management........................................................................................................................ 8
Insurance .................................................................................................................................... 8
Insurance Risk Analysis .............................................................................................................. 9
Insurance risk Iactor proIiling ..................................................................................................... 9
Insurance Risk Modeling .......................................................................................................... 10
Insurance Risk Scoring ............................................................................................................. 10
Insurance risk-level classiIication.............................................................................................. 10
INSURANCE sector in PAKISTAN ......................................................................................... 10
INSURANCE COMPANIES PAKISTAN ................................................................................ 11
Adamjee Insurance ................................................................................................................ 11
EFU General Insurance Ltd. .................................................................................................. 11
State LiIe Insurance Corporation OI Pakistan ........................................................................ 1
The Atlas Insurance Ltd. ....................................................................................................... 1
National Insurance Company Ltd. ......................................................................................... 1
New Jubilee Insurance Company Ltd. ................................................................................... 1
Saudi Pak Insurance Company LTD. ..................................................................................... 1



Reliance Insurance Company Ltd. ......................................................................................... 1
Habib Insurance Company Ltd. ............................................................................................. 1
Century Insurance Company Ltd. .......................................................................................... 1
Shaheen Insurance Company Ltd. ......................................................................................... 1
The United Insurance Company Ltd. ..................................................................................... 1
Beema Pakistan Company Ltd............................................................................................... 1
Alpha Insurance Company Ltd. ............................................................................................. 1
Business & Industrial Insurance Company Ltd. ..................................................................... 1
The Universal Insurance Company Ltd. ................................................................................ 1
Union Insurance Company oI Pakistan Ltd............................................................................ 1
Trakker Direct Insurance ....................................................................................................... 15
Actuarial & Insurance Consulting ......................................................................................... 15
Habib insurance Company Ltd. ............................................................................................. 15
PICIC Insurance Ltd. ............................................................................................................ 15
United Bank Limited. ............................................................................................................ 16
Star Freight Pvt (Ltd) ............................................................................................................ 16
AlIalah Insurance .................................................................................................................. 16
New Hampshire Insurance Company .................................................................................... 16
Premier Insurance Limited .................................................................................................... 17
ItteIaq General Inusurance Company Ltd. ............................................................................. 17
ABN AMRO Consumer Banking .......................................................................................... 17
New Jubilee LiIe Insurance Company Limited (NJI LiIe)...................................................... 17
Uclaim Insurance Advice ...................................................................................................... 17
Travel Insurance ................................................................................................................... 18
EFU insurance .......................................................................................................................... 18
5


Vision Statement ................................................................................................................... 18
Mission Statement ................................................................................................................. 18
Company inIormation ............................................................................................................... 19
EIu insurance polices ................................................................................................................ 0
AVIATION ........................................................................................................................... 0
MARINE CARGO ................................................................................................................ 0
PERSONAL ACCIDENT ..................................................................................................... 0
WORKMEN'S COMPENSATION ....................................................................................... 0
TRAVELCARE (EFU TRAVEL INSURANCE) .................................................................. 0
LIABILITY INSURANCE ................................................................................................... 1
FIDELITY GUARANTEE .................................................................................................... 1
MONEY INSURANCE ........................................................................................................ 1
Cash in Transit / Cash in SaIe Insurance ............................................................................ 1
PLATE GLASS INSURANCE ............................................................................................. 1
BURGLARY ........................................................................................................................ 1
GOLFERS INSURANCE ..................................................................................................... 1
CREDIT CARD INSURANCE .............................................................................................
COMPUTER CRIME INSURANCE ....................................................................................
TIPS ON BUYING RIGHT MOTOR INSURANCE POLICY ..............................................
PROPERTY ..........................................................................................................................
ERECTION ALL RISKS INSURANCE: ..............................................................................
CONTRACTOR'S ALL RISKS INSURANCE: ....................................................................
MACHINERY INSURANCE: ..............................................................................................
ELECTRONIC EQUIPMENT INSURANCE: ......................................................................
COMPREHENSIVE MACHINERY INSURANCE POLICY: ..............................................
6


FIRE .....................................................................................................................................
risk management in EFU ...........................................................................................................
Risk management training .........................................................................................................
Risk Management Central OIIice ..........................................................................................
EIu insurance risk ................................................................................................................. 5
Risk management process oI eIu ............................................................................................... 6
Risk IdentiIication ................................................................................................................. 7
Risk control .......................................................................................................................... 7
Risk Evaluation ..................................................................................................................... 7
Risk Financing: ..................................................................................................................... 8
Methods to diversiIy the risk ..................................................................................................... 8
Insurance .............................................................................................................................. 8
Risk acceptance level ................................................................................................................ 8
Other Methods to diversiIy the external risk .............................................................................. 8
Insurance .............................................................................................................................. 8
Liquidity risk ........................................................................................................................ 9
Financial risk ........................................................................................................................ 9
Interest rate risk .................................................................................................................... 9
InIlation risk ......................................................................................................................... 9
Strategic risk ......................................................................................................................... 9
Other Methods to diversiIy Internal risk .................................................................................... 0
ReIerences ................................................................................................................................ 0

7



Risk management in insuiance
ndustry
Insurance
Urganization
eIu
Main risk of tbe organization
Financial risk
Other risk oI the organization
Liquidity risk
Migration risk
External risk
Because insurance companies have to invest to earn proIits. They may Iace Iollowing
risks.
O Exposure risk
O Interest rate risk
O DeIault risk
O Solvency risk
8


isk
The ISO 1000 (009) /ISO Guide 7 deIinition oI risk is the 'eIIect oI uncertainty on
objectives'. In this deIinition, uncertainties include events (which may or not happen) and
uncertainties caused by a lack oI inIormation or ambiguity. It also includes both negative and
positive impacts on objectives. Many deIinitions oI risk exist in common usage, however this
deIinition was developed by an international committee representing over 0 countries and is
based on the input oI several thousand subject matter experts.
OR
The chance that an investment's actual return will be diIIerent than expected. Risk includes the
possibility oI losing some or all oI the original investment. DiIIerent versions oI risk are usually
measured by calculating the standard deviation oI the historical returns or average returns oI a
speciIic investment. A high standard deviations indicates a high degree oI risk
isk management

Risk Management is the name given to a logical and systematic method oI identiIying, analysing,
treating and monitoring the risks involved in any activity or process.
OR
Risk Management is a methodology that helps managers make best use oI their available
resources.
nsurance

Insurance is a Iorm oI risk management primarily used to hedge against the risk oI a contingent,
uncertain loss. Insurance is deIined as the equitable transIer oI the risk oI a loss, Irom one entity
to another, in exchange Ior payment. An insurer is a company selling the insurance; an insured,
or policyholder, is the person or entity buying the insurance policy. The insurance rate is a Iactor
9


used to determine the amount to be charged Ior a certain amount oI insurance coverage, called
the premium.
Risk management is very important Ior insurance industry. Insurance means that insurance
companies take over risks Irom customers. Insurers consider every available quantiIiable Iactors
to develop proIiles oI high and low insurance risk. Level oI risk determines insurance premiums.
Generally, insurance policies involving Iactors with greater risk oI claims are charged at a higher
rate. With much inIormation at hand, insurers can evaluate risk oI insurance policies at much
higher accuracy. To this end, insurers collect a vast amount oI inIormation about policy holders
and insured objects.
nsurance isk Analysis
Insurance risk analysis methods are described;
O Insurance risk Iactor proIiling
O insurance risk modeling
O Insurance scoring
O Insurance risk-level classiIication
nsurance risk factor profiling
ProIiling insurance risk Iactors is very important. The Pareto principle suggests that 80~90
oI the insurance claims may come Irom 10~0 oI the insurance segment groups. ProIiling
these segments can reveal invaluable inIormation Ior insurance risk management. Insurance
providers oIten collect a large amount oI inIormation on insured entities. Policy inIormation
(such as automobile insurance, liIe insurance, general insurance, etc.) oIten consists oI dozens or
even hundreds oI variables, involving both categorical and numerical data with noisy
inIormation. ProIiling is to identiIy Iactors and variables that best summarize the segments.

10


nsurance isk Modeling
II past is any guide Ior predicting Iuture events, predictive modeling is an excellent technique Ior
insurance risk management. Predictive models are developed Irom past historical records oI
insurance polices, containing Iinancial, demographic, psychographic, geographic inIormation,
along with properties oI insured objects. From the past insurance policy inIormation, predictive
models can learn patterns oI diIIerent insurance claim ratios, and can be used to predict risk
levels oI Iuture insurance policies. It is important to note that statistical process requires a
substantially large number oI past historical records (or insurance policies) containing useIul
inIormation. UseIul inIormation is something that can be a Iactor that diIIerentially aIIects
insurance claims ratios.
nsurance isk Scoring
Insurance risk scoring is numerical rating oI insurance policies. It measures the level oI risk oI
being claimed. This section describes advanced insurance risk modeling and insurance scoring
methods
nsurance risk-level classification
DeIine the maximum risk level. Normally insurance companies are risk averse. They don`t take
risks above Irom a certain level.
$URA sector in PAK$%A
Insurance Sector has registered a very slow growth in the history oI Pakistan. Based on our
research, the Iollowing conclusions emerge:
1. Listed insurance sector on Karachi Stock Exchange in terms oI companies is only ..
. Share oI listed insurance sector on total listed companies on Karachi Stock Exchange is
only 1.1.
. Out oI 67 listed companies, only 9 relate to insurance sector.
. From the birth oI Pakistan till now we have added only 9 listed companies- giving us a
ratio oI less than 0.5 per company per year.
11


5. Turnover Ior 10 months (January October 007) on the Karachi Stock market was only
1.55 oI the total turnover.

6. Share oI insurance sector on listed companies on Karachi Stock Exchange is only .8
in respect oI Market Capitalization.
7. Share oI insurance in GDP oI Pakistan is only 1.80. Ten percentage companies` shares
are listed below par. ThereIore, these are sick. They need revival.
8. In the case oI liIe insurance there is a vast scope. State LiIe Insurance Corporation oI
Pakistan should be immediately privatized. Their Mission Statement should be reviewed
and revisited and on war-Iooting Insurance Policy oI a vibrant nature should be
developed so that Insurance Sector starts serving the economy oI the country. As oI
today, excluding Group Insurance, there are hardly .5 million people in a total
population on 166 million who enjoy the liIe insurance cover. This percentage requires to
be given a quantum jump so that its expansion is seen Ior the beneIit oI the community.
In this respect, we plan to develop a draIt Insurance Policy Ior submission to the
democratic Government oI Pakistan so that they give a serious attention to this critical
area and also develop insurance (Conventional) and TakaIul (Islamic Insurance).
SUA UMPAS PAKSTA
Adam|ee nsurance
The largest insurance company in Pakistan.

EFU General Insurance Ltd.
EFU General Insurance Limited was Iounded in 19. EFU gave the emerging insurance
industry the leadership, the manpower and the drive needed to grow in a situation where at one
time, three-Iourths oI insurance was held by Ioreign companies.


1


State Life nsurance orporation Uf Pakistan
Welcome to State LiIe Insurance Corporation OI Pakistan with aim To remain the leading
insurer in the country by extending the beneIits iI insurance to all sections oI society and meeting
our commitments to our policy holders and the nation.

Tbe Atlas nsurance Ltd.
The Atlas Insurance Limited (Formerly Muslim Insurance Co. Ltd) is the oldest insurance
company in Pakistan. Atlas Insurance made steady progress and became one oI the leading
company in the Iield oI liIe insurance in the country.

National Insurance Company Ltd.
The largest Insurance Company oI Pakistan with a paid up capital oI Rs. billion. An exclusive
insurer to the public sector, NICL has assets oI over Rs. 1 billion and reserves amounting to
over Rs. 10 billion.

ew )ubilee nsurance ompany Ltd.
Welcome to New Jubilee Insurance, Established in 1953, NJI is one of the most reputable
and brightest name in the insurance sector.

Saudi Pak nsurance ompany LTD.
Saudi Pak Insurance Company Limited is owned by Saudi Pak Group having Iollowing share
holdings oI its members: Saudi Pak Industrial & Agricultural Investment Company (Pvt.) Ltd.
60 , Saudi Pak Commercial Bank Ltd. 0 , Saudi Pak Leasing Ltd. 10


1


eliance nsurance ompany Ltd.
Reliance Insurance Company Limited has the Iollowing vision and Mission goals and is
continuously striving Ior excellence.

Habib nsurance ompany Ltd.
Habib Insurance Company Limited, one oI the pioneer projects oI the Habib Group was
established in 19 in Bombay, with a paid-up share capital oI Rs.,500,000. AIter Partition, the
company moved its head quarters to Karachi, and over the years raised its capital to
Rs.60,000,000 through the issue oI bonus shares.


entury nsurance ompany Ltd.
Century Insurance Company Limited, a Lakson Group Company, was incroprated in Pakistan in
1985 as a Public Limited Company and is quoted on stock Exchanges in Pakistan. It commenced
general insurance business in 1989 and since then company has mainted continous growth.


Sbabeen nsurance ompany Ltd.
Our mission is to continuously improve ourselves to become a leading, proIitable Company,
meeting the needs oI our customers and enhancing the value oI our shareholders` investment. We
will accomplish this by using the strengths oI our people and the application oI innovative
science Ior the development oI new insurance products and services that are high in quality and
competitive in price.


Tbe United nsurance ompany Ltd.
United Insurance is the only and First Insurance Company oI Pakistan doing Crop Insurance and
Livestock Insurance. (which have the reinsurance arrangement also).


1


eema Pakistan ompany Ltd.
The company was incorporated in 1960 as Khyber Insurance Company Ltd. Through the years,
Khyber had a checkered history much like the history oI the insurance industry it selI in
Pakistan. What is commendable was survival.

Alpba nsurance ompany Ltd.
Alpha in its own right belongs to the category oI the leading Insurers in Pakistan. Alpha enjoys a
excellent track record providing prompt and eIIicient services to all its clients including the
prompt settlement oI claims.

usiness & ndustrial nsurance ompany Ltd.
Welcome to the Business & Industrial Insurance Company Limitied Iacilitating 'Mina' Haj &
'SariI' Umrah Insurance

Tbe Universal nsurance ompany Ltd.
This Company was incorporated in 1959 and has established its Iranchise in general insurance
market. On premium portIolio basis the "Universal" is one oI the leading indurance company oI
the Pakistan.

Union nsurance ompany of Pakistan Ltd.
Serving Pakistan as one oI the oldest insurance Iirms in Pakistan, Union Insurance Co. oI
Pakistan is a known name in the market, guaranting reliable and secure insurance to its clients
Ior over 0 years now.


15


Trakker Direct nsurance
Trakker Direct Insurance (TDI) was launched on July 1st 005 with a new concept oI Direct
Insurance that allows host oI products and services through our hour Call Centre.

Actuarial & nsurance onsulting
Sidat Hyder Insurance Solutions Ior LiIe group LiIe and General Insurance embodies years oI
cumulative experience in design and implementation oI automated insurance solutions.


Habib insurance ompany Ltd.
Habib Insurance was established in 19 in Bombay, India with a paid-up share capital oI Rs..5
million. AIter independence, Habib Insurance Company moved to Pakistan and then become a
more prominent name in the insurance industry. In 197, the group had to Iace a major debacle;
the Government oI Pakistan nationalized the liIe insurance business oI Habib Insurance. Later in
197, the renowned Habib Bank was also nationalized.

P nsurance Ltd.
PICIC Insurance Limited writes all classes oI general insurance business. We commenced
operations in September 00 with a paid up capital oI Rs.00 million. In two short years we
have succeeded in establishing ourselves as one oI the Irontline general insurance companies in
the market.PICIC Insurance Limited is a associated concern oI the Pakistan Industrial Credit and
Investment Corporation Limited (PICIC), the largest private sector development Iinance
institution in the country.

16


United ank Limited.
Your Bank now provides you FREE Accidental Death and Permanent Disability Coverage oI up
to Rs.50,000/- in collaboration with UBL Insurers.

Star Freigbt Pvt {Ltd]
We oIIer insurance service to all our valuable clients as and when requested. Top insurance
companies are in our approved list. We want to save your time and money. We will not be happy
until we have helped you Iree up your time and allow you to concentrate on your core business.


Alfalab nsurance
AlIalah Insurance Co. Ltd., is one oI the latest ventures oI Abu Dhabi Group in Pakistan. Paid up
Capital oI AlIalah Insurance Co. Ltd., is Rs 0 million which is almost three times the
minimum paid up capital requirement oI Rs 80 million needed to establish a general insurance
company in Pakistan. Backed with the state oI the art IT PlatIorm, the company oIIer Iirst class
security and service to the insuring public comparable to international standards.


ew Hampsbire nsurance ompany
We have been delivering innovative automobile insurance solutions in Pakistan since 199. Our
primary Iocus is providing exceptional service to all oI our independent agents and valued
customers because you are the core oI our business. Our Auto insurance Ieatures products
backed by our unparalleled resources and internationally acclaimed Iinancial strength. Faster,
more eIIicient and accurate methods oI transacting business translate into a healthier relationship
with you Ior many years to come


17


Premier nsurance Limited
Premier Insurance Limited, Formerly Premier Insurance Company oI Pakistan Limited.


ttefaq Ceneral nusurance ompany Ltd.
ItteIaq General Inusurance Company Limited serving the nation in the risks.


A AMU onsumer anking
ABN AMRO Bancassurance product menu spans across various lines oI insurance and oIIers
combination oI liIe and non-liIe insurance plans which are made-to- Iit your personal needs.
Please browse through various liIe cycles illustrated below and Iind the most suitable ABN
AMRO Bancassurance plan as per your proIile.


ew )ubilee Life nsurance ompany Limited {) Life]
New Jubilee LiIe Insurance Company Limited (NJI LiIe) is a subsidiary oI the Aga Khan Fund
Ior Economic Development (AKFED), Switzerland. It was incorporated in Pakistan on 9 June
1995 as a Public Limited Company under the Companies Ordinance 198. Its share are quoted
on the Karachi Stock Exchange. The Company started its business on 0 June 1996. Paid Up
Capital oI the Company is Rs. 67 million, which is the highest amongst public insurance
companies in Pakistan.


Uclaim nsurance Advice
UClaim gives insurance claims advice and help Ior many insurance claim types, including Iire,
wind, water, Ilood damage, theIt, collision and denied claims. II you've had a claim denied or
need to know more about claim law beIore Iiling yours, UClaim can help you.


18


Travel nsurance
At Sky Club Travels & Tours we understand that your vacation can take a year to save Ior, but
only a second to ruin. While you can't do anything to prevent an unexpected storm Irom closing
the airport, you can do something to help cover your travel investment-buy travel insurance.
Travel insurance can provide you coverage Ior medical expenses, trip cancellation/interruption,
baggage damage, and much more. Plus, with every insurance plan you will also receive -hour
travel assistance.
FU insurance
Vision Statement
Our vision is to be the Iirst choice company Ior our customers, shareholders and employees. To
achieve this we will be driven by an obsession to be better than the best in a continuous journey,
not a destination.
At EFU Iirst choice means a sustained commitment to meet and exceed stakeholder expectations.
A will to go the 'Extra Mile to delight our customers with products and services that exceed
their expectations.
Mission Statement
We will manage our aIIairs through modern technology, collective wisdom and institutionalized
leadership. We will be a respected, cultured and an educated company with a strong market
position. Together with our customers, reinsurers and employees we will achieve world class
quality standards through continuous quality improvement. Achieve zero deIects in everything
we do.
We will do good business, with good clients and oI the highest integrity. We will not
compromise our principles and we will like to be known as a responsible corporate citizen aware
oI our obligation to the Government and the society we serve.
19


ompany information
irectors
RaIique R. Bhimjee
Sultan Ahmad
Abdul Rehman
Haji Habib
Jahangir Siddiqui
hief Financial Officer & orporate $ecretary
AltaI Qamruddin Gokal,
F.C.A.
Legal Advisor
Mohammad Ali Sayeed
Audit Committee
Muneer R. Bhimjee
Taher G. Sachak
Abdul Rehman Haji Habib
Rating Agency:
Insurer Financial Strength Rating: AA
Outlook: Stable
Registered Office
Dodhy Building, nd Floor, 5-E
Jinnah Avenue (Blue Area)
Islamabad
0


fu insurance polices
products & Services
AVATU
No one will ever know when mankind Iirst tried to Ily, but it is clear that man envied the giIt
given by nature to the animal kingdom, that is, the ability to Ily. Very large sums are invested in
modern aircraIt and their operation.
MA ACU
"Marine Insurance is said to be Mother oI all Insurances".
In Marine Insurance coverage is provided Ior goods in transit Ior both Import and Export and the
mode oI conveyances on waterways,
PSUAL ADT
Group Personal Accident
Personal Accident cover Ior individual persons
Family Package gives a discount when the whole Iamily buys one policy

WUKMS UMPSATU
The Workmen's Compensation Act provides no-Iault beneIits in the event oI death or injury to a
'Workman' (normally with an income oI less than PKRS ,000 per month) due to an accident at
work.

TAVLA {FU TAVL SUA]
Enjoy our -Hour Non-Stop Travelcare to any destination all around the world which is
specially designed Ior the travelers traveling abroad.

1


LALTY SUA
Public Liability nsurance Any Iirm or any individual in the normal course oI business or other
activities may negligently cause damage to the property oI others or injury to others.

FDLTY CUAAT
Should a company suIIer a direct Iinancial loss as a result oI an employee's dishonest activities,
our Fidelity Guarantee policy will compensate the company Ior such loss.

MUY SUA
ash in %ransit / ash in $afe nsurance
A business may be robbed oI cash either during normal business hours or aIter normal business
hours.
PLAT CLASS SUA
Plate Glass is costly to replace and certain businesses Iind glass insurance an important part oI
their insurance portIolio. This applies particularly to retail shops, department stores, showrooms,
etc.

UCLAY
Property belonging to a business or a household may be stolen Irom the business premises or the
home. Our policy will compensate the business or the individual in the event oI loss oI property
Irom the insured premises Iollowing actual Iorcible entry on to the premises.
CULFS SUA
Contact Us by email: inIoeIuinsurance.com




DT AD SUA
Contact Us by email: inIoeIuinsurance.com
UMPUT M SUA
Contact Us by email: inIoeIuinsurance.com

TPS U UYC CHT MUTU SUA PULY
Driver should bear in mind that there are number oI details that should be taken into account
when applying Ior motor insurance policy.

PUPTY
EIu gives the policy on the property
TU ALL SKS SUA:
Contractor All Risks Insurance oIIers comprehensive and adequate protection against loss or
damage in respect to contract works oI civil engineering projects,
UTATUS ALL SKS SUA
Contractor All Risks Insurance oIIers comprehensive and adequate protection against loss or
damage in respect to contract works oI civil engineering projects,
MAHY SUA
Machinery Insurance is developed to grant industry the eIIective insurance cover Ior expensive
plant, machinery and mechanical equipment.
LTU UPMT SUA
Electronic Equipment Insurance is today a common policy Ior high valuable electronic
equipment. The term electronic equipment comprises all electrical systems having moderate
power requirement such as



UMPHSV MAHY SUA PULY

The Comprehensive Machinery Insurance policy is intended to provide property cover Ior
machinery and industrial plant as an enhancement oI machinery insurance and is specially aimed
at risks which are demanding Irom underwriting perspective.
F
EFU Insurance writes a portIolio comprising a broad spread oI quality business relating to
industrial, commercial and service activities, including transportation, oil production,
manuIacturing, engineering, banking,
risk management in FU
Risk is the sugar and salt oI liIe. Risk brings sweetness to liIe and it brings bitterness. There is
something exciting about the risk, an edge that it brings, a dimension we would not want to give
up. The other side oI risk is less attractive. The bitter side oI risk is one with which we are only
too Iamiliar.
'Risk' is the unlooked Ior, unwanted event in the Iuture. Events such as those at Flixborough,
Seveso, Three Mile Island, Bhopal, Chernobyl, Zeebrugge, Piper Alpha or Kings Cross. These
events and others like them have certainly grabbed the headlines but they are only the tips oI the
risk iceberg. They are the events, which make the headlines and the news bulletins, but they are
Iar removed Irom the everyday Iorms oI risk, which regularly conIront us. The 'real' level oI risk
comprises the steady toll oI Iires, accidents, theIts, explosions, and other similar events. These
are events, which rarely grab Iront-page space in our newspapers but nevertheless Iorm the bulk
oI the work oI risk management.

The dimensions and eIIects oI such loss events have long since become major signiIicance Ior
whole economies and the questions oI how to predict and prevent them are accordingly the
subject oI intensive discussion both in the political sphere and among the public at large.



It is an illusion to think that such events can always be prevented wherever they occur. An
analysis oI loss experience has shown, however, that it is oIten a combination oI individual
causes which, taken on their own, would not have any dramatic impact that leads to major or
even catastrophic losses and that these, in turn, can give rise to some very complex eIIects. This
realization makes it necessary to approach the problem oI the limitation and control oI threats
Irom several angles at once or, in insurance terms, Irom the viewpoint oI several diIIerent classes
oI business.
The complex realities oI modern economic liIe and the growing awareness oI the public at large
place increasing demands on companies to pursue appropriate and Iar-sighted policies about risk.
The same applies to insurers in determining their underwriting policies. The rapid development
oI new technologies and the changing nature oI production processes necessitate a constant
analysis oI risk proIiles. Both entrepreneurs and insurers thereIore enormously increased need
Ior analytical and advisory services. Risk Management Department at E.F.U is meeting part oI
this demand. This company oIIers our client advice in the Iield oI Risk Management.
Aside Irom this, it is EFU's aim to oIIer its clients comprehensive support in questions oI risk
management aIIecting any sector.
isk management training
Depending upon the request, we hold speciIic risk management seminars Ior our business
partners. AIter an introduction to the theory oI risk management, the practical side is
demonstrated by means oI a case study. The participants then have a chance to make risk
management decisions and to analyze these in the course oI workshops.
isk Management entral Uffice
The "Risk Management" Central OIIice oI EFU: Head OIIice - will be glad to receive your
orders. It is responsible Ior coordinating and supervising the work that will be done on your
behalI. This concentration oI activities in one central oIIice is oI great advantage to you. Our
branches with which you have dealt previously will also be pleased to help in passing on your
requests to our risk management specialists.

5



fu insurance risk

6


isk management process of efu

Aside Irom this, it is EFU aim to oIIer its clients comprehensively support in questions oI risk
management aIIecting any sector. BeIore individual risk management concepts can be designed,
the risks in question have to be careIully analysed. Particularly complex industrial risks call Ior
7


thorough analysis and consultation a task that poses a challenge to the entire insurance industry.
EFU oIIers its clients help and support at every stage oI the risk management process:
* Risk IdentiIication
* Risk Evaluation
* Risk Control
* Risk Financing
isk dentification
: The Iirst stage oI the risk management process, risk identiIication, consists in determining what
the risks are that pose a threat to a system, e.g., a company and that could, iI realised, prevent the
company Irom achieving its goals. These goals customarily threaten the company's ability to
make a proIile, to preserve the jobs oI its employees and to supply its products without
interruption at a Iavourable price to mention just the most important. Finally, the proIit made by
the company should be suIIicient to cover the costs oI the production process, to reward the
investors Ior supplying the company with Iunds and to improve the company's Iinancial strength
and market position.
isk control
The main elements oI a company's assets that are threatened are thereIore; Its employees; Its
Iinancial status; and Its property; Its intangible assets such as its reputation and goodwill. The
ability to identiIy possible risks beIore they materialise requires a comprehensive knowledge oI
losses. This knowledge is available to EFU's experts, especially the engineers oI all disciplines,
to aid them in ascertaining which speciIic risks a given company is exposed to.
isk valuation:
Once the risk have been identiIied, they must be evaluated. Their potential Ior causing loss is
estimated in terms oI both the cost oI the damage and the Irequency which such damage is likely
to occur.
Risk Control: The estimated maximum possible loss has to be viewed in relation to the Iinancial
strength oI the company and its goal. In the light oI this relationship, concepts can be developed
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Ior reducing the probability oI a loss occurring on the basis oI the status quo and Ior limiting the
eIIects oI a loss iI it does arise.
isk Financing:
The Iinancing oI risk by means oI insurance is usually the method that best meets a company's
long-term interests, Ior example its interest in being able to calculate its budget Ior several years
in advance. Nevertheless - or rather Ior this very reason - risk management, always involves a
search Ior alternative solutions: its aim is, aIter all, to Iind ways oI Iinancing individual risks.
Metbods to diversify tbe risk
nsurance
Firstly to diversiIy the risk Iirst EFU is insured by the Iollowing companies
O A German company name munechree
O A Swedish company name Swissery
isk acceptance level
EFU is low risk accepter Iirm in nature. They do Iollowing to avoid and minimize risk
O Low exposure
O Investment in gold
O Invest in high rated securities
Utber Metbods to diversify tbe external risk
nsurance
Firstly to diversiIy the risk Iirst EFU is insured by the Iollowing companies
O A German company name munechree
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O A Swedish company name Swissery
Liquidity risk
To Iull Iill the liquidity needs EFU invest in the gold and short term high rated securities
Financial risk
To overcome the Iinancial risk like
O Credit
O DeIault
O Liquidity

EFU uses the short term investment as well as the insurance polices described above.
Gold investment purpose is to obtain liquidity not the proIit
nterest rate risk
To diversiIy the risk EFU uses the Islamic Iinance and banking which is not based on the interest
rate system
nflation risk
To minimize the inIlation risk the company invests in the real state business
Strategic risk
To avoid the Iour strategic risk
O Costumer changes
O Industry changes
O Competition
O Costumer demands
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EFU introduces new products and services according to the costumer demands and changes .in
that way they try to over come competition and industry changes also.
Utber Metbods to diversify nternal risk
To diversiIy the internal risk like employee and culture risk EFU gives minimum 1000 salary
plus 5 commission to each employee and the culture is Iriendly.
eferences
Usman rashid
Unit manager, Multan cantt branch
Adil khursheed
Sales consultant, Multan cantt branch
www.google.com
www.efuinsurance.com