Learning Points from Risk and Insurance - Essay Example

Surname Professor’ Name Class Name Date Risk and Insurance Executive Summary A risk is a term commonly used to express the probability of potential damage, constantly of person or companies. The risk is often used in the business world to denote insecurity in a different situation calculated or estimated upon occurring. Risk management on the other side is the process of identifying the potential damage, the risk, or the loss identifying. In this case, the company identifies the techniques to handle the risk exposures (Vaughan et all, 26). Risk management is an extension of the effort of controlling the risks in which losses are insurance transferring the economic result of arising. Risk and insurance concept, therefore, sets in as a risk management strategy, the safest of all. In this case, the concept works with companies insuring their assets against certain potential hazards, like fire for instance., risk insurance assures a company of financial and asset refund incise any risk occurs. Many insurance markets are crowding in the companies trying to get clients or risk insurance (Vaughan et all, 28). Upon insuring for the potential, risks, the company is therefore required to contribute the certain amount of cash as a premium to the insuring company, regularly over ascertain period , possibly a year or a moth, depending on the agreement. Learning Points from Risk and Insurance The modern world is full of unpredictable risks, with many of the coming from the artificial, and others from natural cause. Risks are varied in extent, ranging from the Accidents, fires, diseases or even deaths. However, the ability of these risks to cause damages in the society have been accompanied by the capacity of the man kind to create a retaliatory response to them (Vaughan et all, 27). This effect, therefore, has made it possible for the unpredictable cases to build opportunities for these risks to be contained in risk assurance, with companies insuring themselves against any potential losses. This paper, however, identifies that risk is classifieds into two broad categories, namely; a. The pure and speculative risk b. The main risks and the particulate risk. The good risk is the situation with two main possibilities, the loss or not. This type of failure causes effects which leave the company or an enterprise in the case which it was before the occurrence of the risk. The examples of the good risk are the road accidents, theft of goods and so on. Speculative risk on the other side is the danger with a chance of winning. An example of this is an investment in the stock market bringing either profit or loss, or investing in any business; the possible occurrences are the gains or gains (Seog, 125). The difference in a pure and speculative risk is very circuital inn any company aiming to insure their assets against any insuring company. The main risk is the type o risk majorly affecting large number of people in an individual setting, majorly the economy at large. Such risks re the occurrences which have enormous effects on large number and in many cases are uncontrollable. Such risks include the unemployment, inflation and all other negative economic indicators. Risk involving a natural disaster is also an important and primary risk (Seog, 125). Then lastly, the effects of terrorism attract is considered as a significant risk. A particulate risk on the other side produces a certain individuals of a society not the entire community. These type of risks are more personal in causes as well as consequences. These risks may include theft, road accident, risks of fire burn down and so forth. The importance of risking these two type is the extent to which the focus is into. Governments majorly concentrate on managing the occurrences of significant risks than the particular danger. This is by controlling the unemployment rates, inflation and so forth. While insuring for risks, the specific risks are more considered are the principal persons are concerned about their assets, hence insurance majorly is on particulate, and the pure danger (Powers, 124). Insurance companies are more concerned about insuring companies absolute risks since they have chances or either occurring tor not. Critical Analysis The crucial writing of the risks ns insurance pare has presents different types of the risks we witness in the societies we live in, there is a background and summary of the risks and insurance of basics, however, the critical thinking introduces this paper to the best insurance options for the risks available to the different enterprises. The risk and insurance topic covers many fields, with many companies insuring against potentially unaccusable events. The pure risks is a critical insurance risk upon, since it presents the real danger possibilities to be insure. Insurance is the best corrective method of dealing with any negatively occurring event, companies insure their business losses from adverse impacts of risks baby insuring them. Practical Implications The risk of comply losing its assets by theft or hacking or financial theft by employees or any other anonymous personnel is a real danger. The possibility of s a risk maybe below but the chances of the risk occurring are either yes or not, this risk has to be associated positively with the result it’s in. The only chances are that it will occur or not, with a no definite chance expected. Therefore, the companies should capitalist eon insuring the pure risk, instead of other type of risks (Blanchard, 78). Upon calculating its potential damages, a company should classify the risks, unto the classes discussed in this paper, hence make the best insurance. Conclusion Insurance companies are the parties with the policy holders to offer contracts to the risk insuring companies, risk insuring companies on the other side are the people with the potential hazards in their premises willing to offer calculated pooled premiums to the insurance company in favour of getting insured for their assists from any possible negative occurrence. This however format the basis of the risk and insurance, where the companies merely protect their premises from the chances of negative happenings from risky events. Works Cited. Blanchard, Ralph H. Introduction to risk and insurance. Washington, D.C: Beard Books, 2011. Print. Page 78 Powers, Michael R. Acts of God and man: ruminations on risk and insurance. New York: Columbia Business School Pub, 2012. Print. Page 67 Seog, S H. The economics of risk and insurance. Chichester, West Sussex, U.K. Malden, MA: Wiley-Blackwell, 2010. Print. Page 124 Vaughan, Emmett J., and Therese M. Vaughan. Fundamentals of risk and insurance. Hoboken, New Jersey: John Wiley & Sons, Inc, 2014. Print. Page 25 Read More