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Report by:

Manzano, Danica Louise O.


Benig, Justine Ryan N.
RISK
Risk may be defined as UNCERTAINTY AS TO
ECONOMIC LOSS

RISK MANAGEMENT
Risk Management may be defined as the process of
effectively reducing the adverse effects of risk.
Risk management requires the ff.
steps:

Identification of pure risks confronting the firm,

Deciding on the methods of dealing with each risk.


TYPES OF RISK AND THEIR EFFECTS
Type of RISK

SPECULATATIVE PURE

EVENT EVENT
(desired) (dreaded)

PROFIT LOSS

NO PROFIT/
LOSS
NO LOSS
METHODS OF
DEALING
WITH RISKS

RISK RISK RISK RISK


AVOIDANCE REDUCTION ASSUMPTION SHIFTING
AVOIDING RISK- is a method of dealing with risk in
which the source of risk is eliminated.

REDUCING RISK- refers to the steps undertaken to lessen


the likelihood of a loss.

ASSUMPTION RISK- refers to the setting aside an amount


periodically to cover possible losses is a valuable
alternative.

SHIFTING RISK- when the first three method of handling


risk cannot meet the requirements of the company or are
impractical, shifting the risk to an insurance company may
be feasible.
Types of
INSURANCE COVERAGES
Insurance coverage's in the Philippines are
generally classified as:

LIFE, and
NONLIFE
LIFE Insurances
Life insurance policies are those that cover
risks of losing one life, disability, or
sickness.
The people working in a small firm will have
to worry about the losses due to sickness,
death, and injury. This is true with the
employees, the manager, and the owners of
the firm.
TYPES OF LIFE
POLICIES

ENDOWMENT
TERM LIFE WHOLE LIFE OTHER TYPES
LIFE

Renewable term limited payment GROUP LIFE

Decreasing term Single premium CREDIT LIFE

Modified life

Variable life

Adjustable life

Universal life
BUSINESS USES OF LIFE INSURANCE
For use as a fringe benefit for employees

To protect the firm against the financial


problems caused by the loss of a key
person

To aid in transferring ownership rights


NONLIFE Insurances
Small businesses also face risks regarding the
following:
Losses on properties owned by the firm
due to fire, robbery, theft, etc.
Losses due to liability claims of third
parties.
These risks may be covered by purchasing
nonlife insurance appropriate to each
specific requirement.
TYPES OF NONLIFE INSURANCES
Fire insurances
Motor car insurance
Marine insurance
General liability insurance
Bonds
Miscellaneous insurances policies
THANK YOU !