Nature & Treatment of Risk

986 Words Feb 16th, 2012 4 Pages
Nature & Treatment of Risk:
It is impossible to win the great prizes of life without running risks. So it’s needless to say the influence of ‘risk’ in our daily life as well as the business world itself. Well here are different risks and their nature briefly discussed with requisite statements.
Risk:
An acclaimed quote of Ralph Waldo Emerson about ‘risk’ says, ‘’I dip my pen in the blackest ink, because I am not afraid of falling into my inkpot.’’ Without being any more rhetoric here’s what Oxford English dictionary states about risk- “Risk is (Exposure to) the possibility of loss, injury, or other adverse or unwelcome circumstance; a chance or situation involving such a possibility.”
Risk may vary in different field of study! But
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Govt. also provides special condition to the given insurance like return in case of any fundamental loss like flood occurs.

Pure risk: types * Personal risk is the risk directly originated from an individual. * Property Risk is the risk affecting the owner of the property * Liability risk involves the threat of the company or individual having to bear the consequences of damage or of breaching standards due to operations, a product, an act or neglect Burden of risk on society:
To get rid of the burden of risk on society the size of an emergency fund must be increased. And also society is deprived of certain goods and services.

Methods of Handling Risk: Avoidance of probable event can cause probable loss. For example, the refusal to fly in the fear of crash can be considered as Avoidance. Well sometimes it may not be very practical! Risk Retention can either be active or passive. An individual may retain all or part of a given risk.

Noninsurance Transfers: Followed by these methods, risk can be handled * Transfer of risk by contracts * Hedging price risks * Incorporation of a business firm Loss control: Loss control consists of 2 major parts. * Loss prevention * Loss reduction Insurance: Insurance is the most practical way of risk handling. Here risk is transferred to another party (mainly insurer). The objective is to reduce the pure risk of
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