There is acommon saying that insurance is full of risks. However, insurance is essentialto cover the people as well as organizations against unforeseen events that cancause potential harm. That is why people opt for insurance. However, there aredifferent types of insurance. So to getbetter details of most suitable insurance and risks associated with it,individuals, as well as companies, consult insurance managers/ advisors.
Most companies take insurance seriously. As per reports, Starbucks pays a hefty sum on the insurance of employees than it invests in coffee. Clearly, there is a great scope for such professionals. If you have a keen interest in the sector and you wish to make your career in it, then you can pursue a course in insurance and risk management. MIT School of Distance Education (MIT-SDE) offers an 18-month Post Graduate Diploma in Management (PGDM) course in Insurance and Risk Management. You can pursue this course to acquire the necessary skills and knowledge to enter the industry.
What is insurance and why it is important?
Insurance is a contractor agreement by which an individual or an entity gets a guaranteed compensationfor specified loss, damage, illness, or death in return for the payment of aspecified premium by an insurance company.
An insurance policy isa kind of legal contract which states conditions and circ*mstances under whichthe insurer will compensate the insured for its loss. As tempting as it maysound to have a backup as insurance, this comes with potential risks.
Risks in insurance
. These are various typesof risks in insurance:
1. Financial and Non Financial risk
Financial risk includesthose risks whose outcomes can be measured in monetary terms. In this type ofrisk, loss of a person/thing is compensated by paying money to the person afterproper assessment of loss. Eg: Damage or stealing of a property like a motorcycle,car, machinery, cash etc.
On the other hand,non-financial loses are those that cannot be measured in monetary terms.
2. Pure risk and speculative risk
Pure risk is an accidentalrisk that results in the physical loss of the insured. The probability of the occurrenceof physical risk is very high. These risks can be the result of humannegligence, natural disaster, communal riots, strikes at the workplace, suddenbreakdown in a manufacturing unit, fall of the country, etc. In pure risk, the outcome will be either be a lossor no loss, there is no gain in pure risk. The outcome is never favorable for theinsured. Eg: loss in business due to damage to resources.
Speculative risk workson speculations. The cause of these risks is mere speculation. The goal ofthese risks is to make a profit. In speculative risk, there is a possibilityfor the insured to get profit however loss can also occur. These types of risksinvolve investing in a share market, setting up a new business, etc.
3. Fundamental risk and Particular risk
Fundamental risks arethe risks that are dependent on nature. These are the risk arises from naturalcalamities and can’t be controlled by any individual or group. The loss causedby such factors is unpredictable; it can be either a huge loss of money andlives or it can cause small loss.
Eg: Flood, earthquake,etc
Particular risks arethe risks that are caused by a group of people and are not natural. It includescauses like communal riots, terror attacks, etc which are not created andcontrolled by nature.
If you wish tolearn the management of these risks, you can join MIT-SDE right away!
Post Views: 1,334
