Role of insurance in Risk Management




Role of insurance in Risk Management
Insurance is an invaluable risk-financing tool. Few organizations have the reserves or funds required to take
on the chance themselves and pay the sum total costs following a loss. Purchasing insurance, however, isn't risk

management. A comprehensive and thoughtful risk management plan is the commitment to prevent harm. Risk
management also addresses many risks which are not insurable, including brand integrity, potential lack of taxexempt
status for volunteer groups, public goodwill and continuing donor support.
Risk Management Process
Risk Management Comprises of mainly three steps
(a) Risk Analysis
(b) Risk Identification
(c) Risk Assessment
(d) Risk Planning
(e) Risk Controlling
Lesson 1 Understanding and Managing Risk 9
RISK ANALYSIS
Risk Analysis is the method of identifying, analyzing and communicating the major risks.
Risk analysis involves
Once risks have already been identified, they need to then be assessed as with their potential severity of impact
(generally a poor impact, such as damage or loss) and to the probability of occurrence. These quantities
may be either an easy task to measure, in case of the value of a missing building, or impossible to understand without a doubt in
the case of the probability of an unlikely event occurring. This method is recognized as risk analysis. In the
assessment process it is important to help make the best educated decisions in order to properly prioritize the
implementation of the chance management plan.

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