Risk Management Problems and the Role of Insurance in Developing Countries

The increase in the scale of globalization expands the area of economic relations, complicating the decision-making process of a particular economic entity or individual, taking into account the expected risks. Enterprise management could avoid risks identified based on expertise or minimize the consequences by developing risk management methods. However, the main problem is not the risk management methods but the insufficient knowledge and experience required to apply them. Especially The developing countries feel the low level of expertise. One of the risk management methods is the insurance mechanism, which does not serve to avoid the expected risks. Still, no other risk factors related to the activity arise by compensating for the incurred loss on time. The role of the insurance market in the risk management of economic entities is directly associated with the risk attitudes of both managers and other employees. The developed insurance market is one of the most powerful tools for social development. The paper brings to the fore the problems of risk management. Their review assesses the state of the insurance market, which reflects the attitude of the risk culture and its management, both legal entities and individuals. The analysis show that the insurance market is imperfect in Georgia, which are unlikely to adapt and act adequately to emerging risks in the global world in the face of existing risk attitudes, the low culture of information storage, and the financial constraints of potential insurers. Therefore, there is a belief in government support, which is widespread in European member states.