Insurance_and_Risk_Management_pptx.pptx

Insurance_and_Risk_Management_pptx.pptx

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  Topic: Risk Managementand Insurance Course Name: Introduction of Business Course Code: BUS101 Prepared By: Ria Mahjabin Dept-BBA Id-15102045 1
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  INTRODUCTION OF INSURANCE Insurance is a means of protection from financial loss.  It is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss.  An entity which provides insurance is known as an insurer, insurance company, or insurance carrier. A person or entity who buys insurance is known as an insured or policyholder. 2
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  ELEMENTS OF INSURANCE Insurer: Theparty (i.e. insurance company) which undertakes to protect the insured from the specified risks and the loss so caused in consideration to a certain premium received from the insured is known as insurer. Insured The person or party who seeks protection against a particular risk and pays a certain amount in consideration to the recovery of the financial loss is known as insured. Premium It is the fees paid by the insured to the insurer as the consideration of the insurance contract for the assurance of the recovery of financial loss so caused. 3
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  ELEMENTS OF INSURANCE Insuredamount It is the agreed financial value of the future loss caused by certain events. Insurance is made for the recovery of this value. Insurance policy It is the contract between the insured and the insurer containing the details of the terms and conditions of a certain insurance. 4
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  REQUIREMENTS OF ANINSURABLE RISK There are six general requirements: 1. Large number of exposure units 2. Accidental and unintentional loss 3. Determinable and measureable loss 4. No catastrophic loss 5. Calculable chance of loss 6. Economically feasible premium 5
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   Assures forfinancial compensation  Reduction of risks  Encouragement to saving and investment  Basis of credit  Maintains economic stability  Promotes business activities  Provides employment opportunities Advantage of Insurance 6
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  DISADVANTAGES  Insurance leadsto negligence as the insured feels that he/she can be compensated for any loss or damage.  Insurance companies do not make the compensation promptly on maturity of the policy or for the financial losses as the expectation of the insured.  It may lead to the crimes in the society as the beneficiaries of the policy may be tempted to commit crimes to receive the insured amount.  Although insurance encourages savings, it does not provide the facilities that are provided by bank. 7
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  RISK MANAGEMENT  “Theprocess involved with identifying, analyzing, and responding to risk.  It includes maximizing the results of positive risks and minimizing the consequences of negative events” 8
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  WHY DO WEMANAGE RISK?  Project problems can be reduced as much as 90% by using risk analysis.  Positives:  More info available during planning.  Improved probability of success/optimum project.  Negatives:  Belief that all risks are accounted for.  Project cut due to risk level. 9
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  HOW DO WEMANAGE RISK?  Use the ten risk management processes……  Risk Management Planning  Risk Identification  Qualitative Risk Analysis  Quantitative Risk Analysis  Risk Response Planning  Risk Monitoring and Control  Probability and Impact Matrix  Stakeholder tolerances  Reporting formats  Tracking 10
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  RISK MANAGEMENT PLAN Methodology – Approach, tools, & data.  Roles & Responsibilities.  Budgeting – Resources to be put into risk management.  Timing – When and how often.  Risk Categories – Risk Breakdown Structure (RBS).  Definitions – Risk probabilities and impact. 11
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  QUANTITATIVE RISK ANALYSIS Analyze numerically the probability and consequence of each risk.  Monte Carlo analysis popular.  Decision Tree analysis on test  Diagram that describes a decision and probabilities associated with the choices  Expected Monetary Value Analysis (EMV). 12
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  STRATEGIES FOR HANDLINGRISK  Negative Risks (or Threats)  Avoid  Transfer  Mitigate  Acceptance  Positive Risks (or Opportunities)  Exploit  Share  Enhance  Acceptance 13
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  RISK MANAGEMENT SUMMARY Risk Management Planning – New  Risk ID – Develop categories & types  Risk Qualitative – Probability & Impact Analysis  Risk Quantitative – Decision Tree, EMV, Monte Carlo  Risk Response – Mitigation & contingency plans  Risk Monitoring and Control – Recurring evaluations 15
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  CONCLUSION  In theworld, risk is present in each and every work and we can not totally remove it but insurance can help us to overcome from risks and its losses. Insurance provides financial assurance which helps the investors to be secured with their invested money and also inspires them to invest money in many sectors. Insurance helps a country to be developed with financial security and also with other things. Though it has some disadvantage, it is helpful for all kinds of business. So, it can be said that it is the key of successful business. 16
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