PRESTIGE INSTITUTE OF MANAGEMENT &
RESEARCH, GWALIOR
Topic: Risk Management and Insurance
PRESENTED TO –
PROF. AMITABH MAHESHWARI
PRESENTED BY –
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BHOOMI SONI
SHAKTI P.S TOMAR
AMAN SHRIVASTAVA
INDRA PRATAP SINGH KAURAV
INTRODUCTION OF INSURANCE
Insurance is a means of protection from financial
loss.
Itis a form of risk management primarily used to
hedge against the risk of a contingent, uncertain
loss.
An entity which provides insurance is known as an
insurer, insurance company, or insurance carrier. A
person or entity who buys insurance is known as an 2
insured or policyholder.
ELEMENTS OF INSURANCE
Insurer:
The party (i.e. insurance company) which undertakes to protect the insured
from the specified risks and the loss so caused in consideration to a certain
premium received from the insured is known as insurer.
Insured
The person or party who seeks protection against a particular risk and pays
a certain amount in consideration to the recovery of the financial loss is
known as insured.
Premium
It is the fees paid by the insured to the insurer as the consideration of the
insurance contract for the assurance of the recovery of financial loss so
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caused.
ELEMENTS OF INSURANCE
Insured amount
It is the agreed financial value of the future loss caused by certain
events. Insurance is made for the recovery of this value.
Insurance policy
It is the contract between the insured and the insurer containing the
details of the terms and conditions of a certain insurance.
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Advantage of Insurance
Assures for financial compensation
Reduction of risks
Encouragement to saving and investment
Basis of credit
Maintains economic stability
Promotes business activities
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Provides employment opportunities
DISADVANTAGES
Insurance leads to negligence as the insured feels that he/she can be
compensated for any loss or damage.
Insurance companies do not make the compensation promptly on
maturity of the policy or for the financial losses as the expectation of
the insured.
It may lead to the crimes in the society as the beneficiaries of the
policy may be tempted to commit crimes to receive the insured
amount.
Although insurance encourages savings, it does not provide the 6
facilities that are provided by bank.
RISK MANAGEMENT
“The process involved with identifying, analyzing,
and responding to risk.
It includes maximizing the results of positive risks
and minimizing the consequences of negative
events”
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WHY DO WE MANAGE RISK?
Project problems can be reduced as much as 90% by using risk
analysis.
Positives:
More info available during planning.
Improved probability of success/optimum project.
Negatives:
Beliefthat all risks are accounted for.
Project cut due to risk level.
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HOW DO WE MANAGE RISK?
Use the ten risk management processes……
Risk Management Planning
Risk Identification
Qualitative Risk Analysis
Quantitative Risk Analysis
Risk Response Planning
Risk Monitoring and Control
Probability and Impact Matrix
Stakeholder tolerances
Reporting formats
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Tracking
RISK MANAGEMENT PLAN
Methodology – Approach, tools, & data.
Roles & Responsibilities.
Budgeting – Resources to be put into risk management.
Timing – When and how often.
Risk Categories – Risk Breakdown Structure (RBS).
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Definitions – Risk probabilities and impact.
QUANTITATIVE RISK ANALYSIS
Analyze numerically the probability and consequence
of each risk.
Monte Carlo analysis popular.
Decision Tree analysis on test
Diagram that describes a decision and probabilities
associated with the choices
Expected Monetary Value Analysis (EMV).
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STRATEGIES FOR HANDLING
RISK
Negative Risks (or Threats)
Avoid
Transfer
Mitigate
Acceptance
Positive Risks (or Opportunities)
Exploit
Share
Enhance
Acceptance
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Methods of handling Risk
• Avoiding
• Controlling
• Accepting
• Transferring 13
CONCLUSION
In the world, risk is present in each and every
work and we can not totally remove it but
insurance can help us to overcome from risks and
its losses.
Insuranceprovides financial assurance which
helps the investors to be secured with their
invested money and also inspires them to invest
money in many sectors.
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Thank You
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