PURPOSE, SCOPE AND LIMITATIONS

Insurance is the science of spreading of the risk. Insurance is the system of spreading the losses
of an individual over a group of individuals. Insurance is a method of sharing of the financial
losses. A few from a common fund formed out of contribution of many who are equally exposed
to the same kind of loss what is uncertainty for an individual becomes a certainty for a group.

OBJECTIVE
The report seeks to achieve the following objectives:
a. Understanding risks: Risks are the uncertainties that hamper the normal day to day working of
the businesses. It is very important to understand these risks as they are different in nature from
one another and a response for one cannot be used to protect the organization from the other.

b. Assessment of Risks: All the methods to reduce risks by preempting the procedures are
worthless if one fails to assess the magnitude of the type of risk involved. Hence it is equally
important to assess the magnitude of risk involved.

c. Understanding the impacts: Risks being nothing but uncertainties, function as catalysts in an
unlikely situation and their impact on the organization also differs from situation to situation.
There will never be a condition when the risks will have an equal impact over a business
concern.

d. Mitigation of Risks: Mitigation refers to the practice using which the business concerns
reduce their exposure to the uncertainties. After learning about the risks and their impacts, the
next step is how to reduce their impact on the business concern.

e. Policy Formulation: Every organization forms a policy for the mitigation of risks which is
commonly referred to as the Risk Management Policy. This policy serves as guidance note as
in this document, the organization lays down what procedures are to be followed while
assessing the risks and what all steps are to be followed in event of an unlikely situation.