”Insurance Is a Better Buffer Against Crises than Cross-shareholdings”

According to this recently-published discussion paper by the Foreign Non-Life Insurance Association of Japan, modern risk management provides better protection from crises than maintaining cross-shareholdings with friendly firms. The paper puts corporate governance in the wider context of economic growth and security and highlights the fact that management of Japanese companies is often not organized so as to to optimally use risk management solutions that can be provided by insurance. An example mentioned is that only around 17% of the losses from the 2011 Eastern Japan earthquake were recoverable by insurance, as compared with 75% recovery in the case of the Christchurch, New Zealand earthquake the same year.

The paper proposes supporting stronger corporate governance, fostering a culture of risk management and leveraging best industry practices.

Read the discussion paper here.

Source: Foreign Non-Life Insurance Association of Japan Inc.

About BDTI

The Board Director Training Institute (BDTI) is a “public interest” nonprofit in Japan dedicated to training about directorship, corporate governance, and related management techniques. It is certified by the Japanese government to conduct these activities as a regulated nonprofit. Read a summary about BDTI here, and see a menu of its services for both corporations and investors here.

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