WHAT IS RISK PLANNING AND CONTROL?


 WHAT IS RISK PLANNING AND CONTROL? 

Once risk and identified and analyzed, it is very important to plan and adopt an appropriate technique for controlling the risk. Risk planning and controlling may be the stage which uses the chance analysis process is over.
You will find five major ways of handling and controlling risk.
(a) Risk avoidance;
(b) Risk retention;
(c) Risk transfer;
(d) Loss control; and
(e) Insurance.
Risk Avoidance
Risk avoidance is one approach to handling risk. Like, you are able to prevent the risk of being pick pocketed in
10 PP-IL&P
Metropolitan cities by staying out of them; you are able to prevent the risk of divorce by not marrying; a career employee who's frequently transferred can prevent the risk of selling a home in a depressed real estate market by renting instead of owning; and a small business firm can prevent the risk of being sued for a faulty product by not producing the product.
But as a practical matter, not absolutely all risks can as well as should really be avoided. Like, you are able to prevent the risk of death or disability in an airplane crash by refusing to fly. But is this practical and desirable? The alternatives are not appealing. You are able to drive or take a bus or train, which take lots of time and often involve great fatigue. Although the chance of an airplane crash occurs, the safety record of commercial airlines is excellent, and flying is really a reasonable risk to assume. Or one might wish to prevent the risk of business failure by VBNM,./refusing to go into business for oneself. But an individual may have the required skills and capital to be successful in business, and risk avoidance may not be the very best approach for him to follow in this case.
Risk Retention
Risk retention is really a second approach to handling risk. An individual or a small business firm may retain all or element of a given risk. Risk retention can be either active or passive.
Active Risk Retention
Active risk retention means that an individual is consciously aware of the chance and deliberately plans to retain all or element of it. Like, a motorist might wish to retain the chance of a small collision loss by purchasing an own damage insurance coverage with a Rs. 2,000 voluntary excess. A homeowner may retain a small element of the chance of injury to the home by purchasing a Householders policy with substantial voluntary excess. A business firm may deliberately retain the chance of petty thefts by employees, shoplifting, or the spoilage of perishable goods. Or a small business firm may use risk retention in a self-insurance program, which is really a special
application of risk retention. In these cases, the person or business firm makes a conscious decision to retain part or each of certain risk. Active risk retention is useful for two major reasons. First, risk retention canvas  money. Insurance may not be purchased at all, or it may be purchased with voluntary excesses; either way, there's often a considerable saving in the price of insurance. Second, the chance might be deliberately retained because commercial insurance is either unavailable or can be obtained only by the payment of prohibitive premiums. Some physicians, for example, practice medicine without professional liability insurance since they perceive the premiums to be inordinately high

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