Overview of Risk and Insurance

Risk is the possibility of an unusual event that results in unintended damage to people due to UNFORGETING:

• Danger of risk

• Space and time

• Level of risk

• Risks

Pure risk involves three possible outcomes: loss, gain and no change

• Correct

• Wrong

Speculative risk (a)   insured

Criteria for assessing the level of risk is

• Danger of risk

• Frequency of risk occurrence

• Sevirity of the risk

• Level of risk

(a)   allows insurers to accept responsibility for the economic losses of their insured

“The majority compensates for the few” is a principle of

• Risk management

• Managing risks through insurance

• Financial management

Does the risk of unemployment satisfy requirements?

• No, it doesn't

• Yes, it does

Does the risk of flood peril satisfy requirements?

• YES

• NO

Which following is not characteristic of insurable risks?

• occur by chance

• be definite

• be significant

• be catastrophic

The person or business that applies for an insurance policy is:

• policy owner

• applicant

• beneficiary