1. Which two types of natural disasters are not normally covered in a homeowner’s policy? 6. Kim just paid off her house and is thinking about no longer having homeowners insurance (her bank required it as part of her mortgage agreement). Her house is worth $300,000. What are the pros and cons of this decision? 7. Would your answer to the previous question change if you found out that Kim has $3,000,000 in the bank?

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Classification Of Risk

Risk means when there could be a possibility that the returns expected from a particular project or investment may or may not match the investor's expectations. In other words, the uncertainty of an income arising from a source that would either be lower than expected or result in losses in risk exposure of the project. The higher the risk involved, the higher is the return expected by the investor as the investor is exposed to a high level of risk. There are various methods by which different types of risk can be assessed and avoided or mitigated.