Risk refers to the possibility that something unpleasant or dangerous might happen. Risk is the uncertainty of loss.

Risk is the variation in the possible outcome that exists in nature in a given situation.

Dynamic and static risk. Fundamental and particular risk. Speculative and pure risk. Quantifiable and non-quantifiable risk. Insurable and non-insurable risk. Systematic and non-systematic risk.

Management of risks is concerned with the direction of purposeful activities towards the achievements of individual or organizational goals. It is the identification, analysis and economic control of those risks, which can threaten the assets or earning capacity of an enterprise. Risk management is process that identifies loss exposure faced by an organization and selects the most appropriate techniques for treating such exposures.

To create the right corporate policies and strategies. To mange men and machine effectively. To evaluate the risks confronted by business. To introduce various plans and techniques to minimize the risk. To create risk awareness among the people. To avoid costs, disruption and unhappiness relating to risks.

It facilitates an organization to avoid great financial losses resulting into bankruptcy. Protecting employees from accidents that might result in death or injury. Due attention given to the costs of handling risks. Effective utilization of resources. Survival of the firm. To continue operating. Stability of earning. To continue growth of the firm.

Defining the objectives of risk management

Identify risk or risk exposure Selection and evaluation of appropriate technique

Insurance has been defined to be that in which a sum of money as a premium is paid by the insured in consideration of the insurers bearing the risk of paying a large sum upon a given contingency. Insurance companies bear risk in return for a fee called premium. Insurance is a provision which a prudent man makes against for the loss or inevitable contingencies, loss or misfortune.

Insurance is a method in which a large number of people exposed to similar risks make contributions to a common fund out of which, the losses suffered by the unfortunate few, due to accidental events, are made good. Insurance is a contract, the insurer agreeing to make good any financial loss, the insured may suffer within the scope of the contract.

Risk sharing and risk transfer Co-operative device Definite and calculable loss Large number of exposure units Random loss Amount of payment Payment of claim at the occurrence of contingency Not similar to charity and gambling

Provides security and safety Provides peace of mind Safeguards mortgage property Eliminates dependency Encourages savings Profitable investment Increases business efficiency wealth of the society is protected Contribution towards investment Contribution towards social security

Life insurance General insurance Social insurance Property insurance Liability insurance Fidelity insurance Credit insurance

Utmost good faith Insurable interest Indemnity Proximate cause Subrogation Contribution Cooperation Probability Warranties Mitigation of loss

Filling up the proposal form Declaration by the proponent Attachment of proof of age Presentation of proposal to the agent Medical examinations by agent Submission of report by agent Scrutiny of proposal by the branch office Depositing of insurance premium Registration of proposal Sending proposal to appropriate department Taking final decision Issue of acceptance or regret letter Preparation and issue of insurance policy

Insurer Insurance company Insured Policy Premium Beneficiary Nominee Sum insured Indemnity Risk Exposure Chance of loss Grace period