Regional Formation and Development Studies

The 2008 global economic and financial crisis hit hard in Iceland and Latvia. Economic developments prior to the crisis, as well as response to the crisis were, however, different in these two countries, yielding different results. Both countries received assistance from the International Monetary Fund (IMF) during the crisis and the IMF has labeled their reform programs as success stories. This article reviews and evaluates the post crisis situation in Iceland and Latvia, both in terms economic performance, as well as social progress. It also discusses how other countries, as well a multilateral institutions, may have influenced the reform programs in Iceland and Latvia.

Iceland is a small, resource rich country in Europe that is highly dependent on foreign trade. According to the World Bank classifications, Iceland is a high income economy, but with a population of a little bit more than 300 thousand inhabitants, is the smallest economy within the Organization for Economic Co-operation and Development (OECD). Iceland is highly dependent on foreign trade, especially on trade with the European Union, where economic and political integration is evolving and the question about the most feasible level of participation is a future challenge for the country. Iceland is a member of the European Free Trade Association (EFTA), the European Economic Area (EEA) and the Schengen area, and the European Union (EU) candidate country until recently, when its government decided to withdraw its EU membership application. Currently, the EEA agreement ensures Iceland access to the EU common market. The question remains, what is the most feasible arrangement for Iceland’s prosperity in the long term? Should it continue to rely on the current arrangement? Should it seek the EU membership in the future and, perhaps, subsequently become part of the Euro Area? What are the possible benefits and disadvantages for Iceland joining the EU and the Euro Area?

Risk management is one of the most critical and important areas that affects every insurance company’s activity and development. The goal of the research is to identify and establish the most important parts of risk management with the aim to improve the insurance company’s reliability with the risk self-assessment. Also risk management is one of the most significant functions under Solvency II Directive framework. The methods chosen for conducting the research are: literature exploring, comparative methods, modeling, analysis, methods of expert evaluation.