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is the possibility of an unfortunate occurrence Risk is a combination of hazards Risk is unpredictability Risk is uncertainty Risk is the possibility of loss.



is in the eye of the beholder Uncertainty exists regardless of whether this doubt has been recognized by those who may be most directly involved. Basic of risk is lack of knowledge; regardless of whether the state of lack of knowledge is recognized. Risk exists outside the individual, it may be recognized as existing but this is not a prerequisite.






It is the prime cause, it is what will give rise to the loss.

Examples: fire, theft, motor accident


It is the factor that may influence the out come.

Physical hazard Moral Hazard



and non financial risk

Financial Risk
Where the outcome can be measured in monetary terms Example Material damage to property Where the outcome can not be measured in monetary terms Selection of an item from restaurant menu

Non Financial Risk



& Pure Risk

Speculative Risk
Where there is the chance of gain & loss Example: Investing money in shares

Pure Risk

This involves a loss or at best break even situation Example; Risk of motor accident or injury at work



& particular Risk

Fundamental risk

Arise from causes outside control of individuals Example: earthquakes, floods

Particular Risk

These are personal both in their cause & effect Example : fire, theft



Cost Human Cost

Pain & suffering



related risk Crime losses Road Accident Fire



Risk risk




creates the hope for profit Risk is a bar to entry into the market Risk encourages a safety culture
The identification, analysis and economic control of those risks which can threaten the assets or earning capacity of an enterprise is defined as risk management



identification Risk analysis Risk Control

Physical risk control

Pre-loss risk reduction Post loss risk control Risk retention Risk transfer

Financial risk control


person or organization can transfer the financial effect of the risk to some other party. is a risk transfer mechanism by which an individual or an organization can exchange its certainty for certainty.




Risk Property damage risk Liability Risk


For any risk to be considered insurable it has to fulfill the following criterias :

It should It should time). It should It should It should

occur by chance. be definite (in terms of amount and be predictable. be significant. not be catastrophic to the insurer.

Since the beginning, people have tried to protect themselves from risks and resulting losses

is Risk?

Risk is the potential danger that threatens to harm or destroy an object, an event or a person

Available Risk Mitigation Tools?

Avoid Risk Mitigation:

A concept generally misunderstood as Tawwakul. Tawakkaul by definition however is employment of all Halal available means/resources and entrusting Allah SWT with the outcome

Self-Insurance or setting aside contingency money for the rainy day Conventional Insurance:

A commercially viable system but inherently flawed with Shariah defined ills such as Riba, Gharar, and Qimar/Maysir
A Halal and Ethical alternate to conventional insurance


concept of Insurance?

practice of Insurance?

Shariah has no objections as to the concept or objectives of insurance ; it only has reservations with the way it is being practiced

Fiqh Council of World Muslim League (1398/1978) resolution and Fiqh Council of Organization of Islamic Conference (1405/1985) in Jeddah resolved that, conventional insurance as presently practiced is Haram. And that, cooperative insurance (Takaful) is permissible and fully consistent with Shariah principles. Hence, conventional insurance is prohibited for Muslims because it contains elements of Riba, Al Maisir, and Al Gharar. By contrast, Takaful provides risk protection in accordance with Shariah using principles of Taawun (mutual assistance), brotherhood, piety and ethical operations


are numerous references to Ta'awun and Takaful in the Quran in the context of co-operation and solidarity for the good of society. One widely quoted reference is from sura alMaidah, as follows:

"And help one another in righteousness and piety and do not help one another in evil deeds and enmity" (Al Quran : Al Maidah 2)


of the approaches to social help and assistance practiced in Islam that relates to the first Constitution of Medina, stated that,
"the emigrants from among the Quraish shall be responsible for their ward and shall pay the blood money in mutual collaboration and shall secure the release of their prisoners by paying their ransom themselves, so that the mutual dealings between the believers be in accordance with the principles of recognised goodness, justice and mutual responsibility".

One of the approaches to social help and assistance practiced in Islam that relates to the first Constitution of Medina, stated that,
"the emigrants from among the Quraish shall be responsible for their ward and shall pay the blood money in mutual collaboration and shall secure the release of their prisoners by paying their ransom themselves, so that the mutual dealings between the believers be in accordance with the principles of recognized goodness, justice and mutual responsibility".

Where a person inflicts bodily injury or homicide it becomes incumbent upon him or, as mutual responsibility, upon a group of people representing him, to compensate the injured party in cash or kind. This compensation is called "diya". Where homicide is intentional, the diya or blood money is payable by the person committing that act. A third party (aqila) pays blood money only where the act is unintentional or where it is offered by the aqila on voluntary basis. (Malik Al-Muwatta)

A fatwa by Dr. Yusuf Al-Qardhawi states that Islamic insurance may exist in a condition where each participant contributes into a fund used to support one another. Islam aims at establishing a social order under universal brotherhood. The underlying concept is that of mutual cooperation and help. The Prophet (pbuh) stressed: In mutual compassion, love and kindness you will find the faithful like a body, so that if one part feels pain, the whole body responds with wakefulness and fever. A Muslim is the brother of another Muslim; he neither wrongs him, nor leaves him without help, nor humiliates him'

Protection "(Allah) who prepares nourishment to prevent the fear of hunger and saves / puts at peace those who fear" (Al Quran : Al-Quraisy 106:4)
Co-operation A Muslim is brother of a fellow-Muslim. He should neither commit oppression upon him nor ruin him and he who meets the needs of a brother, Allah would meet his needs and he who relieves his brother from hardship, Allah will relieve him from the hardships to which he could be put on the Day of Resurrection. (Sahih Muslim)

The similitude of believers in regard to mutual love, affection, fellow-feeling is like that of a body, when any limb of it aches, the whole body aches because of sleeplessness and fever . (Sahih Muslim) A believer is like a brick for another believer, the one supporting the other. (Sahih Muslim) And hold fast, all together, by the rope which Allah (stretches out for you), and be not divided among yourselves; and remember with gratitude Allah's favour on you; for you were enemies and He joined your hearts in love, so that by His grace you became brethren; and you were on the brink of the pit of fire, and he saved you from it thus does Allah make His signs clear to you; that you may be guided. (AlQuran - Al Imran 103)

The believers are but a single brotherhood: so make peace and reconciliation between your two (contending) brothers; and fear Allah, that you may receive mercy. (AlQuran - Al Hujurat 10)
(Their bearings) on this life and the hereafter they ask you concerning orphans. Say: the best thing to do is what is for their good; if you mix their affairs with yours, they are your brethren; but Allah knows the man who means mischief from the man who means good. And if Allah had wished He could have put you into difficulties: he is indeed exalted in power, wise. (AlQuran - Al Baqarah 220)

But those who before them had homes (in Medina) and had adopted the faith, show their affection to such as come to them for refuge, and entertain no desire in their hearts for things given to the (latter), but give them preference over themselves, even though poverty was their (own lot) and those saved from the covetousness of their own souls; they are the ones that achieve prosperity. (AlQuran - Al Hashr 9) Serve Allah and join not any partners with him and do good to parents, kinsfolk, orphans, those in need, neighbours who are near, neighbours who are strangers, the companion by your side, they wayfarer (you meet) and what your right hands possess: for Allah loves not the arrogant, the conceited. (AlQuran - An Nisaa 36)