Life is full of uncertainties and uncertainty means risk. Risk means the possibi lity of loss or damage.

Insurance is taken to compensate for the losses occurred. Insurance g ives protection against the perils that one faces in life. Insurance guards ones elf from the danger that may or may not happen in the future. Risk does not mean threat of life only. It does not take your permission to come in toyour life. It also includes other risk such as economic, social, and polit ical and manyother around which we dwell. The risk can be classified into variou s categories such as: Financial & Non-Financial Risk: The risk that is concerned with the financial lo ss is known as financial risk. Generally the financial risk is related to business activities.Business may face financial risk such as bad debts; loss due to inves tments; possibility ofinterest loss on the amount of credit given etc. Insurance policy can compensate for this kind of financial risk. Non Financial Risk: A risk that cannot be measured in financial terms is kno wn asnon financial risk. Even business activity can deal with the non financial risk suchas resignation of versatile employee, non-cooperation from employees et c. other thanbusiness there are other factors such as death of a member in a fam ily and so forth canbe regarded as non-financial risk. Static & Dynamic Risk: Static means no change. This type of risk occurs even whe n there is no change in the economy. Fire, theft, misappropriation of cash etc can be anexample of static risk. Static risks are sometimes predictable. There is n o benefit if staticdoes not occur, but, there is a sure loss when they occur.

Dynamic Risk: Dynamic risks are just opposite of static risk. Dynamic risks aremostly unpredictable. Dynamic risk may take place due to changes in environme nt,technological changes etc. many business is made victims due to sudden change s in theeconomy. Fundamental & Particular Risk: Fundamental risk is also known as group risk. Fundamentals risk occurs due to changes in major factors related to population. Trainaccidents, flood, war etc is the example of fundamental risk. Particular Risk: While particular risks are contradictory to fundamental ris k. Particularrisk involves only losses aroused to individuals. Particular risk i s also known as personalrisk. House theft, illness, death etc is the only thing that insurance will take off. Pure & Speculative Risk: Pure risk is a kind of risk where there is either loss or no loss, but there is no gain. Insurance can compensate only for pure risk and not specul ativerisk. Pure risk generally involves activities related to goods. For an inst ance, if thefactory faces shut down due to employee strike and is not able to su pply goods onproper time it is pure risk and can be insured.Pure risk is further divided into categories such as personal risk, property risk andliability risk. Speculative Risk: Speculative risk cannot be insured. As insurance covers on ly thoserisk which results into loss, Speculative risk may also result in profit s. Speculative riskin general includes gambling or betting. Here, the risk is in control of the person tosome extent. The risks such as playing for horse, tradi ng in the stock market etc areconsidered as speculative risks.