| On basis of the business risk of China's life insurance industry, the problems of China's financial risk was studied from a new perspective with global financial turmoil as the research background. Owing to management particularity including fragility and sensitivity of life insurance industry in the financial industry, the assets and credit of that might suffer damage because of the objective environmental change, fail decision, poor management and so on. In the 90s of the 20th century, some of life insurance companies' bankruptcy in Japan and South Korea after Asian financial crisis has given warning to life insurance operation. At the beginning of the twenty-first century, as a blasting fuse, the subprime lending crisis originated from American banking industry rapidly has spread through the securities and insurance industries, which evolved into a financial crisis now and triggered a global international financial market turbulent. As a global insurance giant, AIG developed the life insurance, property insurance, accident insurance and aircraft leasing business in more than 130 countries around the world, which possessed more than 110 thousands of employees and the assets of more than 1 trillion U.S. dollars. After spread by the financial crisis, AIG was on the verge of collapse instantly. All of these were shocking by the sight.Being the special industry for business risks, life insurance plays a vital pole in society such as stabilizing society, collecting and offering finance and promoting economic development, which has a great influence on the social stability and financial security. Therefore, to study the business risk of life insurance at the aspect of both theoretical and empirical research, to analysis deeply the main social, political, and economic factors causing the risks, and to reveal the degree of risk facing China's life insurance industry provided a scientific basis for the government monitoring department to formulate policies resolving the actual existence of potential and establishing an effective risk prevention mechanism, and supply a reference for the insurance agencies to avoid the potential risks during the actual business course. So, the topic has a great theoretical value and practical significance.The risk essence of life insurance business was investigated in the paper. The basic principle of life insurance business such as the characteristic, ratemaking and profit source of life insurance business was analyzed. The risk source effecting life insurance business was analyzed from the operating process of Life Insurance Company. The essential characteristics between the life insurance business risks and property insurance business risks were determined. The classification methods of the life insurance business risk for the international and national scholars were summarized and compared. Because of the long-term of insurance time limit and the predictability of accounting, the business risks of life insurance was more complex than that of property insurance, and the potential risks were often not exposed in the short term.In the paper, the causes of the life insurance business risks were carried out an all-directional and multi-angle analysis, which includes six aspects such as interest rates, the application of life insurance funds, solvency, asset liability matching of life insurance and the pricing and design of products and market development of life insurance. Above mentioned provided a basis for formulate the measures and policies to resolve and prevent risks.The interest rate fluctuation was always a risk factor of management and operation for Life Insurance Company. The interest rate risk was very closely associated with each other from the moment of Life Insurance Company promised guaranteeing the minimum rate of return in the certificate of guarantee. The influences of interest rate fluctuation on life insurance business were analyzed from the aspect of the pricing and requirement of life insurance products, the liability, cash flow and solvency of Life Insurance Company. The familiar foreign measure methods of life insurance interest rate risk were introduced. The scale of interest spread loss in China's life insurance industry was calculated, which concluded that the old interest spread loss in China's life insurance industry was not resolved and the new one has formed due to interest rate fluctuation and investment environmental deterioration in China originated from global financial tsunami. Drawing lessons from the successful experience of avoiding interest rate risk in developed countries, five measures solving and avoiding the interest rate risk of life insurance were presented, that is to develop a healthy consumption concept of life insurance during the products transformation period, to improve management capacity of capital utilization; to strengthen the matching management of assets liabilities, to carry out flexible assumed interest rates and set up a special reserve fund.The matching risks of assets liabilities were increasingly concerned in life insurance industry, which was an evolution path of risk factors in international life insurance industry. The origins and characteristics of assets liabilities management of life insurance and its application in life insurance operations were described. The matching detection methods of assets liabilities management in several foreign life insurance companies were introduced. Through the analysis of assets liabilities management of American life insurance, how to build the asset-liability management system in China's life insurance industry was discussed from the aspect of model, organizational system and management technical.Due to the sharp deterioration of investment environment in financial markets caused by financial crisis in the United States, investment risks would be unveiled. In this paper, the evolution path of American financial crisis and its direct negative influence on China's life insurance investment were analyzed, and the indirect effects of American financial crisis on China's life insurance industry would be occurred. In the long run, if the economy immerses into a deep and prolonged recession and the capital market remains in the doldrums, the investment return of insurance industry would be significantly reduced, which would be subject to a certain effects on the sales of investment products. The research and calculations methods of international and domestic investment risk measurement were introduced. The results showed that the domestic insurance industry was facing the dilemma under the current study status, either directly use the foreign risk measure methods, which would l inevitably cause the'climate sickness'; or directly adopt general management model for risk management, carry out the experience-based risk management model, which would face greater risks in the absence of experience or less experience. The study on risk measurement methods would promote the improvement of insurance risk management efficiency in China's Insurance Companies.The results showed that the measurement and monitoring of life insurance business should start with evaluating the financial reporting of Life Insurance Company. The supervision mode, methods and indicators system in the United States, the European Union and China were researched, and the financial evaluation contents of life insurance business were stated all-around combined with the financial testing ratios of insurance credit rating agencies to test Life Insurance Company. The model characteristics of China's solvency supervision system and the adjustment and improvement of solvency supervision were evaluated. The solvency of China's life insurance enterprises was calculated adopting quantitative methods, which concluded that the solvency of China's life insurance industry showed a downward trend.Based on the above-mentioned research contents and conclusions, the micro-countermeasures and macro-countermeasures to resolve and prevent the business risk of China's life insurance industry were proposed in this paper. The resolve and prevention of life insurance industry mainly depended on the increasing improvement of operation ability of the life insurance companies. As a infant industry concerned the national economy and the people's livelihood and national financial security, the support of national policies should also be given, introduced to support the development of China's life insurance industry, and the fiscal and taxation policy and financial support policies supporting the development of China's life insurance industry should be established. Meanwhile, the life insurance industry was also an industry needed to supervision. Strengthening the insurance supervision system would become the important measures to deal with financial crisis world for the insurance industry in the countries around world, China was no exception. In view of the serious problems of mixed operation exposed in financial crisis, in the future, the financial innovation business in China should carry out isolation operation. Insurance industry was a financial industry with preferential reform and open door policies and higher marketization degree, the adverse effects of financial crisis spread on insurance industry should be paid close attention to. To prevent the conduction of international financial risks on China's insurance industry also would become the policy options to improve business ability and to resolve operational risks of China's life insurance industry.
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