Managing Property and
Managing Property and
Liability Risk
Liability Risk
Risk
•Risk is uncertainty about the outcome of event.
•Speculative risk exists in situations where there is potential for gain and loss.
Risk Management
•It is the process of identifying and
evaluating situations involving pure risk to determine and implement the
Risk Management Process
•Identify sources of risk (exposure).
•Estimate risk and potential losses.
•Choose how to handle risk.
•Implement risk management program.
Insurance
•It is a mechanism for transferring and
reducing pure risk through which a large number of individuals share in the
financial losses suffered by members of group.
Hazards
•Morale hazard exists when a person is indifferent to a peril.
•Physical hazard exists when a
characteristic of person or property insured increases the chance of loss. •Moral hazard exists when an insured