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Risk Management Notes

Risk management is a scientific approach that utilizes various tools like avoidance, loss control, and transfer to deal with pure risks facing individuals and organizations. It involves identifying, analyzing, and reducing exposure to potential losses. Risk management is broader than insurance management as it encompasses a wider scope of activities to manage various risks, using techniques beyond just insurance. The goal is to differ from insurance management in focusing on analyzing and controlling risks, not just insuring against them.

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816 views1 page

Risk Management Notes

Risk management is a scientific approach that utilizes various tools like avoidance, loss control, and transfer to deal with pure risks facing individuals and organizations. It involves identifying, analyzing, and reducing exposure to potential losses. Risk management is broader than insurance management as it encompasses a wider scope of activities to manage various risks, using techniques beyond just insurance. The goal is to differ from insurance management in focusing on analyzing and controlling risks, not just insuring against them.

Uploaded by

Viraja Guru
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Risk Management Notes

Nature of Risk Management:

1. Scientific approach in dealing with pure risk:Risk managment is a scientific


approach to the problem of dealing with the pure risks facing an individual or an
organization in which insurance is viewed as simply one of several approaches
for dealing with such risk. Traditionally the risk management tools
-avoidance,loss control, and transfer -have been applied primarily to the pure risk.
2. Broader than insurance management:Risk management involves identifying,
analyzing, and taking steps to reduce or eliminate the exposures to loss
faced by an organization or individual. The practice of risk management
utilizes many tools and techniques, including insurance, to manage a wide
variety of risks.

The concept of risk management encompasses a much broader scope of


activities and responsibilities than does insurance management. Risk
management is now a widely accepted description of a discipline within
most large organizations. Basic risks such as fire, windstorm, employee
injuries, and automobile accidents, as well as more sophisticated
exposures such as product liability, environmental impairment, and
employment practices, are the province of the risk management
department in a typical corporation.

3. Differs from insurance management in philosophy.


4. Pure and speculative risk
5. Fundamental and particular risk
6. Personal risk , property risk and liability risk.
7. Risk arising from failure on part of others
8. Fidelity risk
9. Risk due to ownership and use of transport vehicle

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