Risk Management is emerging an important area of insurance

Risk Management is emerging an important area of insurance. The insurer succeeds if he is able to manage the risk properly. The risk may be insurance or uninsurable. Insurer transfers the risks to reinsurance companies.

Risk is uncertainty or loss or profit. It may arise because of hazards routine business and dynamic functions. The risk may be financial and non-financial. Business risks and individual risks are also insured. Business risks include profit, price, credit and other risks. Personal risks include property risk and liability risk.

The risk management involves loss control, loss financing and risk reduction. Loss control is loss prevention method which reduces frequency of loss. Control devices to prevent loss are installed in property to prevent fire.

Loss financing is done through retention, insurance hedging and risk transfers. Risk reduction is possible through better forecasts and diversification.

Risk is uncertainly of loss or profit. If business enterprises are not managing the potential risk, it may suffer incredible loss. The insurance industry ensuring risk has to be very particular about the risk management.

The need and objectives of risk management, risk identification, principles of risk management, strategies of risk management and functions of important association of risk management will illustrate how to manage a risk effectively.