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 Possibility of adverse results flowing from

any occurrence.
 Risk arises out of uncertainty i.e. possibility
of an outcome being different from the
expected.
 The term risk is used in insurance business
also mean either a peril to be insured
against.

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 Risk is a condition where there is a
possibility of an adverse deviation from a
desired outcome that is expected or hoped
for.
 Degree of risk may or may not be
measurable.
 Risk entails the possibility of financial loss.
 Financial loss may be defined as a decline
in or disappearance of value due to a
contingency.
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!"

 Ñreater the uncertainty, greater is the risk.

 Higher the probability of loss, greater is the
risk.
 The expected value of loss in a given
situation, or the mathematical value of a
risk at any point of time, is the probability
of the loss materializing multiplied by the
amount of anticipated loss.

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"

 ÿy writing different classes of insurance

business and even within a single class, by
catering to various types of risk.

 ÿy writing business in different geographical

locations, states within a country or different
countries.

 ÿy means of reinsurance, i.e. by placing

reinsurance business with other companies

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 " 

 The identification, analysis and economic

control of those risks which can threaten
the assets or earning capacity of an
enterprise.

 Risk Management Ơincreases the probability

of success, reduces the probability of
failure and the uncertainty of achieving the
organizationƞs overall objectivesơ

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 Rn organisation can transfer the financial

effect of the risk to some other party.
 Insurance is a risk transfer mechanism
by which an organisation can exchange
its uncertainty.
 The organisation agrees to pay a fix
premium and insurance company agrees
to meet any losses.

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Risk assessment is defined as, Ơthe overall

process of risk analysis and risk
evaluationơ

1. Risk Identification
2. Risk Description
3. Risk Estimation

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 Insurance is a contract.
 One party namely the insurer, contracts
with another, the policyholder, to
perform a particular service.
 The practical aspects of the insurance
contract are proposed to be dealt with
here.
 The risk, insurer and insured forms a
triangle.

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 Filling of proposal form.

 Issuance of insurance policy.
Insurance policy contains
1. Components of Policy
2. The Heading
3. The Preamble
4. The Signature

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#$%

·. The operative Clause

6. The Exceptions
7. The Policy Schedules
8. Definitions
9. Conditions
10. Cover Notes
11. Certificates

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