Risk Handling10 - 8 - 09

MethodsIn the management of risk and taking responsibility of a situations in preparation for risk occurring there one can choose from the following

To plan for a risk to happen and ready one situation in order to avert the risk is called Avoidance

In preparation for a risk occurrence, so by then using deductibles, co-payments and Self insurance to cover is called retention

When the risk exposure associated to large number of persons and handled by the group of persons make an agreement to assist one another its called Sharing

There is also a form of loss control which is referred to as Reduction which contains two parts Loss Prevention and Loss Reduction

In controlling loss the most often used and most effective method is by transfer. The party with the loss effecting them in this situation leaving a financial responsibility to a insuring company.

Insurable Risk Elements

Due to Chance (loss)

Must be measurable and definite

Must be predictable

Must be catastrophic

Loss exposure must be large

Insurance not mandatory

In handling with avoidance, persons would altogether stand clear of doing the riskful activity

In retention resulting factors would be reduction of expenses, improved cash flow, and claim controls due to loss risks

The two determining factors of reduction, loss prevention and loss reduction are described as Prevention attempting to avert a risk before presentation. Reduction decreases loss affection as much as possible to spare parties

Method characteristics