The new and changed risks have initiated the need for a new way of risk management which is called enterprise risk management. It is an integrated and systematic management of all risks to which the company is exposed. Companies apply enterprise risk management in all sectors of the economy, including the insurance sector. ERM enables overall risk reduction, reduces volatility of return, provides stable revenues and reduces total costs, thus increasing shareholder prosperity and company value.
New trends in risk management have led to changes in the circle of risks which are accepted by insurance companies.There are other risks now besides pure risks which are not traditionally accepted by the insurers. This is caused by greater competition and meeting the new demands of the insured (corporate sector). Regulators, rating agencies, stock exhanges and all institutional investors insist on the implementation of ERM because of its superiority in relation to the management of individual risk.